“Will GOL Pay The $102m Or Is It Free Money?” -LPP Raises Concerns, Writes AfDB

The Liberian People’s Party (LPP) has raised concern on the status of the $102M extended to Liberia in the fiscal year 2018/19 by the African Development Bank (ADB) and has written the multilateral financial institution to provide classifications so as to remove the uncertainties surrounding the commitment of the government with respect to the disbursed fund.

In a Letter addressed to Mr. Orison Amu, Country Manager, African Development Bank Group, dated December 1, 2021, copy of which is in possession of The Analyst, LPP said it believes that the public would enormously benefit from efforts of the financial giant in helping to improve accountability and transparency if it kindly honors the request from the party and provide schedules or documentations pertaining to grant and/or loan lent to Liberia, including grant and/or loan given to Liberia, if any, for calendar year 2022.

“For example, the Liberian Citizens’ Guide reported $48M, $74M, $86M and $102M as grants received from ADB during 2013/14, 2014/15, 2015/16; 2016/17 and 2018/19 respectively. LPP and the public will want to know if Liberia has to pay back these annual trenches of funds or not. Our emphasis here is not to focus on determining whether nongovernmental agencies prudently spent the money on projects in Liberia”, the party said.

LPP said being curious to determine if Liberia will have to pay back grants received, it visited the 2019 Audited Financial Statements of ADB and discovered that ADB is another money-lending institution, which lends money to debtors to make a profit, therefore it is not a philanthropic organization donating money to poor countries. It said additionally, the 2019 Audited Financial Statements of African Development Bank reported the percentage of shares owned by countries. Liberia owned 0.101%, Sierra Leone owned 0.21%, Nigeria owned 9%, and the United States of America owned 6%.

The Party also said that in addition to the list of profit-seeking shareholders, the amounts reported as donation/contribution on the income/expense statements of the 2019 Audited Financial Statements was not closed to the $102M grants allocated to just one country, Liberia and noted that  moreover, statements within the Audited Financial Statements indicate that grants within the Audited Financial Statements were not donations/contributions, rather the amounts are debts that Liberia has to pay back.

“For example, the Chief Executive stated “…cumulative loans and grants signed, net of cancellations, on 31 December 2019, amounted to $32.33 billion… the number of active loans and grants as of December 2019 was 1,392, while 733 loans amounting to $5.78 billion had been fully repaid or canceled….,” according to page # 159.

“On page # 157, also, the Chief Executive stated “…the grant element of a Concessional Donor Loan (CDL) is defined as the present value of the financial benefit that the Fund derives when contracting the CDL, between the interest rate paid on the CDL and a discount rate (set at 2.65% in Special Drawing Rights (SDR) terms for this replenishment…To the extent that the African Development Fund (ADF) extends grants in addition to lending at highly concessional rates, the conventional profitability and financial ratios are not deemed to be an appropriate means of determining its effectiveness in delivering development resources to its regional member countries.” LPP elaborated further

Juxtaposing the amount that has been given to Liberia and the status it is made to believe, LPP provided some insights what constitutes a grant and under which it could be waived or the debtor be made to repay the amount thus, “What is a grant? An amount can continue to be a grant if a country is high risk (“red-lights”) or it can become a loan if a country is low risk (“green-light”). Half of the amount can be loan and the balances are granted if a country is medium risk (“yellow-light”). The International Development Association’s publication defines “grant” into “traffic lights”, which in turn determine the share of IDA grants: high risk or in debt distress (“red” light) is associated with 100 percent grants, medium risk (“yellow” light) with 50 percent grants and 50 percent credits, while low risk (“green” light) is associated with 100 percent credits and zero grants”, it said.

As regards the proposed Budget 2022, LPP said President George Weah administration calendar year 2002 budget, on Table 5 called FY 2022 Aid Projection of page # vii of the FY 2022, projected that Liberia would receive USD $188M as “grant” and USD $48M as “loan.” It said however, the 2022 budget did not specify whether nongovernmental agencies will receive and spend the USD $188M “grant” and USD $48M loan and that On the other hand, the 2022 budget did not include any portion of the projected “grant” and “loan” within the calendar year 2022 budget, which would have indicated which portion of the grant and/or loan the government would administer. It further said that in previous budgetary documents, the government had identified which grant and/or loan the government would be responsible for and which amounts nongovernmental agencies would be responsible for.

LPP noted that in addition, the link (www.liberiaproject.org), attached to the calendar year 2022 budget, did not provide any information pertaining to the identity of creditors and donors, adding that  moreover, the government is making it difficult for unauthorized researcher or organization to get Liberian Citizens’ Guide budgetary documents, which are prepared by MFPD. It said the documents would list the names of donors and creditors that awarded the grants and loans.

“Do huge amounts reported as grants represent donations/contributions to poor countries? If yes, why would money-lending institutions gain from donating huge amounts to poor countries? The amounts associated with money-lending institutions (i.e., for example, African Development Bank-AFB) appeared to be large, and therefore, questionable. In fact, our bureaucrats did not associate the USD $188M grants to any entity within the 2022 budget. But they had associated grants with the International Development Association (IDA), International Monetary Fund (IMF), etc. during previous years”, LPP stated.

The party concluded that Liberians, as would-be debtors, should be given the appropriate information in order to advise its elected representatives on the idea if Liberia should increase its loans.

Comments are closed.