Liberia: Big Steps Taken Toward Debt Relief

Liberia is on its way to clearing debts of US. $1.5 billion to international financial institutions under relief schemes designed for the world’s most heavily-indebted nations.

This was announced in separate statements released in Washington, DC, yesterday by the World Bank and the International Monetary Fund.

 
The World Bank said a comprehensive arrears plan agreed yesterday positioned Liberia to benefit from the Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).

The agreement, it said, covered Liberia’s arrears to the World Bank – owed $458 million, the IMF – owed $772 million – and the African Development Bank – owed $233 million.

The bank said the agreement would allow Liberia “to rapidly clear much of its arrears to smaller multilateral creditors and, with the Paris Club assistance, to clear much of its arrears to bilateral debtors.”

The IMF’s managing director, Dominique Strauss-Kahn, said that enough pledges of finance had been received from IMF member countries to enable the fund to give relief. Once pledges were "formalized", arrears could be cleared and new funds provided.

He added: "IMF staff are currently finalizing discussions with the Liberian authorities on a three-year, IMF-supported program, so that Liberia can build upon the initial economic recovery, maintain the strong growth needed to reduce poverty, and restore debt sustainability."

The heads of both institutions praised the Liberian government’s record since taking office last year.

World Bank president Robert B. Zoellick said that since the elections, “President Ellen Johnson Sirleaf has done a remarkable job in restoring stability and moving Liberia to a path of peace and development.”
 
Strauss-Kahn said Liberia had established "an encouraging track record of macroeconomic management and reforms" in spite of difficulties in recovering from its civil war.

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