A couple weeks ago we announced the great news that Liberia had reached Heavily Indebted Poor Countries (HIPC) completion point. For countries with a lot of international debt, the HIPC process offers a means to debt cancellation from multilateral organizations by undertaking major and difficult reforms to improve country economic and financial systems.
Liberia started the HIPC process two years ago with US$4.9 billion in debt, and potential annual repayments that overshadowed their entire annual budgets! Throughout the period of Liberia’s civil war and the resulting crisis, loans were not serviced and interest and penalties accumulated. By reaching completion point, Liberia has passed the 12 triggers stipulated by the World Bank and the IMF and today, Liberia has had $4.6 billion of their multilateral debt has been cancelled.
This action is a recognition of the tremendous efforts taken to transform Liberia, under the leadership of President Johnson-Sirleaf, and is an endorsement of the progress made in public financial management, debt management, governance, social service provision and the implementation of a poverty reduction strategy.
This decision now opens up more fiscal space for Liberia, allowing them the opportunity to embark on more development programs that will help expand the economy whilst continuing to tackle poverty. It also paves the way for additional debt relief. Liberia still has a way to go before we can declare victory. The Paris club, which holds Liberia’s bilateral debt, includes wealthy countries that meet under the Chairmanship of the French Ministry of Finance. Their next meeting is in September and the HIPC completion news certainly positions Liberia to make the best case possible.
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