Did GOL Increase Debts To $1.8b In Order To Pay The Central Bank Of LIBERIA (CBL)?

The Perspective
Atlanta, Georgia
October 24, 2022

 The Liberian People’s Party (LPP) appeals to Liberian Lawmakers to request and investigate domestic debts and the USD $106M loan offered by our premier economic adviser and major creditor, the World Bank. Public reports indicate that Liberia, represented by President George Weah’s Minister of Finance, Development and Planning, honorable Samuel D. Tweah, and the World Bank have signed a $106M loan agreement, increasing debts to $1.8B, from $1.7B. (See page # 61 of the 2021 Central Bank Annual Report).

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, the development will be impaired, and most sadly, chaos might not be far away from the country and its residents.

Residents of Ghana 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 canceled Liberia’s $4.5B loans and gave the country an opportunity to borrow money and finance programs. The international partners canceled 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).

Passing on the corruption torch

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 the 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.

In August 2021, the Liberian People’s Party (LPP) 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 analysts 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 normal practice, LPP stated. Therefore, the government can reduce allocations for the “Use of Goods and Services” and increase payments to domestic creditors. Yet, such a cut should not undermine the smooth operation of 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 that has compelled the government to increase domestic debt payment by $49M? The government paid USD $28m in 2019/20 but drastically increased it $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 the 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 usurp the functions of national and/or local governments to build roads, repair bridges, construct clinics, etc.

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.

Thanks,
J. Yanqui Zaza
Chairman

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