“Where is the US$77 Domestic Debt Payment?” -LPP Wants Pres. Weah, CBL to Account -Urges Lawmakers to Stop WB US106M Loan, If…

By The Analyst News On Oct 24, 2022 195

MONROVIA – In the wake of the World Bank recent approval of a US106 Million loan facility to service Liberia’s development needs, the opposition Liberian People’s Party (LPP) is calling on lawmakers to stop the Government from borrowing the said $106M until President George M. Weah can retrieve the appropriation reported in the National Budget as domestic debt payments to the Central Bank of Liberia (CBL), because, according to the LPP, there are no records at CBL showing expenditure of $77M in 2020 and USD $77M in 2021. The LPP wants the lawmakers to compel the Central Bank of Liberia to fully account for incremental payment of domestic debt from USD $28m in 2019 to USD $74m in 2020.

“What economic arrangement compelled the government to increase domestic debt payment by $49M? Government paid USD $28m in 2019/20, but drastically increased it to $77M. Moreover, why did the government begin paying debts to CBL in 2020 when debts payment was to begin in 2029 and end in 2044? Page # 55 of the Audited Financial Statements of CBL stipulates that Liberia’s debt payments to CBL should commence in 2029 and end in 2044,” the LPP stated in a press release issued October 23, 2022.

According to the LPP, the two public documents of CBL (Annual Reports and Audited Financial Statements) didn’t record any transfer of money to pay CBL’s debts. “On page # 103 of CBL 2021 Annual Report, authorities didn’t disclose government’s payment of $77M, also on page # 14 (Cash Flow) and page # 81 (Related Party transactions) of the 2020 Audited Financial Statements, authorities didn’t report the payment and/or the transfer of USD $77M in 2020.

“Had CBL earned a loss/profit from investing the USD $77M into a business, page # 11 of the 2020 Audited Financial Statements would have disclosed it. In fact, CBL is prohibited from competing with money-making entities, including non-profit-making institutions. In addition, it can’t not usurp the functions of national and/or local governments to build roads, repair bridges, construct clinics, etc.

LPP Wary of Creeping Debt Burden

The opposition Liberian People’s Party also raised hackles over the creeping yoke of debt that is bedeviling African nations like Liberia that had been sought and received debt relief but crept right back into overburdened debt.

The LPP reasoned that debts, especially money borrowed by under-developing countries, can be used to produce food, repair bridges, construct clinics, hire qualified teachers, etc. On the other hand, if improperly managed, development will be impaired, and most sadly, chaos might not be far away from the country and its residents.

Citing the case of Ghana, the LPP noted that residents in our West African neighboring country are now experiencing the burden of excessive loans, according to the International Monetary Fund (IMF). “This is the same African country that was once praised for good governance. The Institution-IMF reported in September 2022 that prices of goods and services have surged to 37.2%. Worst, according to the 2020 report of the World Bank, 44.1% of Ghana’s national revenue was appropriated to pay interest, the cost to borrow money.

“Before Ghanaians began feeling the pains of excessive debts, Liberians, in 2010, celebrated the freedom of limited debt when donors cancelled Liberia’s $4.5B loans and gave the country an opportunity to borrow money and finance programs. The international partners cancelled the total debts of USD $4.5B (Principal was $1.9B and Interest was $2.5B), excluding domestic debts of USD $270M. (See page # 37 of the 2007 Annual Report of the Central Bank of Liberia-CBL).

“Unfortunately, our former President, Mrs. Ellen Johnson Sirleaf, did not follow the 2009 Public Financial Management Laws, but rather increased Liberia’s debts to $870M by 2018. Liberia would have advanced forward in real growth without borrowing more money had her administration reduced corruption, and prudently used billions of dollars donated by donors and appropriately used the new banknotes it printed frequently.

“Her handpicked successor, President George Weah, is not only increasing Liberia’s debt burden, but rather he and his advisers are also stealing government’s resources. President Weah has yet to account for the $25M borrowed to buy back mutilated old banknotes; the government can’t account for the L$16B; and can’t provide documents for the use of the 23M collected for Road Fund,” the LPP lamented.

The LPP noted that in August 2021 it called on President George Weah to explain why the government reduced public spending by 63%, from $115M in 2019/20 to $42M in 2021, 2022, and 2023 respectively.

“And, of course, budget analyst used the cuts and increased payment to domestic creditors from $28M in 2019/20 to $77M in 2020/21, to $77M in 2021/22, and to $77M in 2022/23, respectively, according to Page # 41 of the 2022 National Budget.

“Transferring money from one budget item to another budget item is a normal practice, LPP stated. Therefore, the government can reduce allocations for “Use of Goods and Services” and increase payments to domestic creditors. Yet, such a cut should not undermine the smooth operation of the government, nor strangulate the economy. The 63% ($115M minus $73M) reduction in the appropriation of “Use of Goods and Services” will affect the economy, LPP predicted.

“What economic arrangement has compelled the government to increase domestic debt payment by $49M? Government paid USD $28m in 2019/20, but drastically increased it to $77M. Moreover, why did the government begin paying debts to CBL in 2020 when debts payment was to begin in 2029 and end in 2044? Page # 55 of the Audited Financial Statements of CBL stipulates that Liberia’s debt payments to CBL should commence in 2029 and end in 2044.

“The two public documents of CBL (Annual Reports and Audited Financial Statements) didn’t record any transfer of money to pay CBL’s debts. On page # 103 of CBL 2021 Annual Report, authorities didn’t disclose government’s payment of $77M, also on page # 14 (Cash Flow) and page # 81 (Related Party transactions) of the 2020 Audited Financial Statements, authorities didn’t report the payment and/or the transfer of USD $77M in 2020.

“LPP recommends that our Lawmakers advise President George Weah to retrieve the appropriation reported in the National Budget as payments to CBL. If CBL didn’t spend the $77M in 2020 and USD $77M in 2021, as evidenced by the financial records of CBL, Liberia should not borrow the $106M,” the LPP release signed by Chairman J. Yanqui Zaza stated emphatically.