Liberia: Borrowing and Spending on Purpose


The debt was US$6.7 million when we signed it. We built the road; we paved the road from Monrovia to Bo Waterside. Not the Cape Mount road. It is just today, and you can see that road.

The debt today is US$13 million (the debt we took for US$6.7 million is US$3 million because we did not pay). Now, there is some reason why we did not pay. It is true that after the coup d’état, we had some economic problems, so the government itself had difficulties in paying.

Liberia: Borrowing and spending on purpose, discovering the survival boots – President Ellen Johnson Sirleaf’s remarks when she appeared on Sky FM Talk-show “5050” on Thursday, July 1, 2010 to explain to the public Liberia’s achievement of the HIPC Completion Point.

5050 Host: When we were coming to this program, one lady saw me on Mechlin Street and said to me “T-max, do not speak your big-big book because we want the Oldma to hear. So I am going to bring it down: “The Money the people cleared, how much was this money?

President Sirleaf: Well, we owed the people US$4.9 billion. If I may explain my statement, that means that if were paying that money, it was going to take us twenty eight years to pay the money we owed. That is a plenty money that can solve plenty problems in Liberia. Now people are asking where that money goes. Others say the money borrowed at the time we were in power. Sometimes, I think people don’t understand this finance business because if they understood it, they would know that when you not paying you debt, it will get double more because the people put interest or penalty on top year after year. The thing we met, the thing we left there in 1980 to where it’s today, is three times more because the people did not service the debt. Now, nobody must blame it on the war. Sierra Leone was in war and they did pay all their debts. They don’t have to go through HIPC business. There are other debts that we have to talk about which went into other people’s account. Look, let me say this. The people who don’t understand it, when the minister comes, he will do a workshop. He will go on the blackboard, and go through all the explanation how we got to the debt we owed, what we did with it, what kind of road we built, or what kind of agriculture program we undertook, and how the debt went from where it was to where it is today. Then all the different things we did to move the debt from where our head, he will go on the board and explain all of this.

5050 Host: That is what I was about to ask you. When people hear that Liberia owes three billion dollars because we did not pay the three million dollars, the question is what did we do with the money and what do we tell them?

President Sirleaf: That is the reason I gave one example of the debt that I know about, the Kuwait Debt. The debt was US$6.7 million when we signed it. We built the road; we paved the road from Monrovia to Bo Waterside. Not the Cape Mount road. It is just today, and you can see that road. The debt today is US $13 million (the debt we took for US$6.7 million is US 13 million because we did not pay). Now, there is some reason why we did not pay. It is true that after the coup d’état, we had some economic problems, so the government itself had difficulties in paying. And also, if you look at the record you will see that plenty money came in during that period. Anyway, let’s just thank God that we are cleared with it and so let’s move forward.

5050 Host: Oldma, we are clear with this one. We thank God after many, many years, we are out of it. Liberians have been suffering, development not coming, because we took something we didn’t pay. Because of this, lender could not trust us. Since we have cleared this debt, what are the things we are going to do? Are we going to start borrowing again?

President Sirleaf: Wait now! We got to be disciplined too. We have established what we call “the Debt Management Committee.” That was one of the triggers. That committee comprises the minister of finance, minister of planning, Central Bank of Liberia and some people from the civil society. Before we take any new loan, it must go through that committee. We also have agreed with the IMF that we are only going to take loan equal to a certain percentage of our GDP. The GDP is all the things you can produce in the country. The forest, the log we send out, the rice we produce, the power you produce, the iron ore and all of that is what they call “Gross National Product” (GDP). Now, we will only do a certain percentage in debt because we don’t want to put the country at risk. We don’t want to leave office, and leave the same kind of problem on someone, like other people left on us.

Every year, we can only do a certain amount of new debt. Also we got to be a good debtor. You see, some of the debts we finished paying are bad debts. US $1.5 billion is what they call “Commercial Credit,” which you can put on the old government head because that was new debt. That’s when people said they built houses. The big houses you see around town unfinished are some. They said they supplied goods. Sometimes the goods come and at times, it did not come. US $1.5 billion of that we were able to buy at three cents for every dollar because when the people bought it, it did not worth anything. So the good [thing] is that we will not pay what they call “supplier credit”. We will take commercial loan from the commercial banks. We will do that. We will take what they call “Concessional Loan”, that is good loan. That is where you go to India or Brazil and borrow money for projects that will make money, or projects that will open up the country. So other people can be able to produce things. That means, we have to take money only to build roads or to fix the port, or to be able to bring power into the city. You will take the loan on the trend where (for example, when we [go] there, they sent a mission here) their loan will take forty years to pay; sixteen years grace [period]. That means, for sixteen years, you are not paying anything. When you start paying after the sixteen years, you will have forty years to do so. That is what they call “concessional loan” and that’s what we will go for. That is the kind of money that we will go for; we will not go for the kind of money that will get people in trouble.

5050 Host: So we finish the entire loan but there is the Paris Club. Don’t we hold them something?

President Sirleaf: Yes, we owe them. The Paris club is the bilateral debt. That is the debt from France, America and all. We got some more debt yet. When you reach the Completion Point, you still have small debt where you still go to what they call “bilateral”, which is the different individual country. They will have to sign with us to say the final debt is off your head. We still got some small debt we still have some problem with. Eh, you know, under the Paris Club, some of the debt not there. Even the commercial debt, we still have some US $20 million which some of the people did not agree to take the three cents that we offered. So, we still got to settle all those small ones before everything will be completely free. But we have gone too far and we can say that we have gone too far.

5050 Host: Now that we are cleared of the debts, what are conditions attached if we want to borrow? Are there conditions attached or not?

President Sirleaf: No, conditions would be attached. Not conditions by the people who lend us the money, but conditions by our own people that this time, the place we put the money, there must be what they call “Productive Something.” That is, we must only use it to fix our roads so our people can see the road, and we must make report all the time. We have to show report as to when the money came in, where it went and many things.

So, the people who are lending us the people, because they know they want to get paid, we don’t want to take that money and put it in some kind of big house. I think, we want to put it in agriculture where we can produce something so you can be able to send something out of the country and get money what they call “reserve.” We want to put it [somewhere where] when we open a road up, private people will be able to come and make their farms and mining people will be able to come. So, those are the conditions that we must use the money for proper save and that debt management committee got to look at it. If somebody wants to lend us some money and if we don’t meet those criteria, they will say no.

Caller: Darius Dillon: I want to say a hearty good morning to President Ellen Johnson Sirleaf. I call this morning to express my deep sense of gratitude to the President of this country, the entire government of Liberia as well as the National Legislature for the enactment of those requisite laws that fast-tracked the process that led us to reaching the Completion Point of the HIPC process that we are benefiting from. I just want to express my deep sense of gratitude as a nationalistic Liberian to President Ellen Johnson Sirleaf for the victory that has been scored. I thought the President would have declared this day a half working day so that we could celebrate.

The President: It is coming from Mr. Dillon who always takes us to task. Let me congratulate Mr. Dillon, at least somebody who is a nationalist. You know when something is good for the country, he is willing to commend it. Thank you Mr. Dillon!

Caller: Willington B. Sombai: Let me, first of all, extend my thanks and appreciation to Almighty God and to you, your entire able men and women in this government that are struggling to see the betterment of Liberia. We have borne another giant step; but my own concern is the issue of corruption. Why people who are accused of corruption, tried and set free are not given their job? For example, former Assistant Postal Minister Terry Genesis who was dismissed, prosecuted, and acquitted. Why has he not been given back his job? [My other concern is] why people coming from college and high school not getting jobs even though they have some training?

President Sirleaf: No. let me say that some of the things he raised are correct; there are things we have to address. At times, I think they feel very frustrated because of a process that takes so long for us to bring people to book when they misuse the public trust. I wish I could go out there and just grab some people and do something. But if I do it, I will be violating people’s human rights. To do it, you have to go through the legal process, send them to court, and they defend themselves. Some of those cases take so long and I myself get frustrated too. That is what I applaud those who say corruption should be a non-billable crime. I endorse it, I will work for it. When the Legislature passes it, I will sign it. It is a tough one, but I agree with it. But let’s put it right. When I dismiss somebody for something I know on the basis of what I have seen, and when the court clears them, we accept the court’s decision. But that’s does not mean, I have to put them back.

5050 Host: Would this thing have ever been easier, Madam President, had it not been your intervention, or it would be the same way it is?

President Sirleaf: Well, I believe that any government, any administration would have gone down the same road, would have tried to get Liberia free of this debt. But there is doubt that it helps that I made those leading efforts because I know the issues, I work with the issues over many years, I know the institutions and boards, I know their policies, I know their rules, I know their conditions and I know the people who are their leaders in these institutions, both bilateral and multilateral. So we were able to do it as fast because I am conversant with the politics to deal with that because this is the work I have been doing for over thirty-five years. So I was able to bring my own knowledge and my own connection to this task and work with young people who themselves worked very hard. So, yes, I had a major part to play in all of these. But any administration would do it and I hope any administrations that follow me will carry on this sound financial management that we are trying to put into place.

5050 Host: This means that your administration will not borrow too much money like previous administrations did?

President Sirleaf: No, I just told you that we have a very good law in place; we have good processes in place that will make sure that we are cautious of any loan we take and that loan must be used from productive purposes.

Caller Albert Chea: I want to congratulate the president for a brilliant step taken. This is a good day for Liberia; it is a very good beginning. To see such huge amount in that tone relieved is something I must be thankful to her for. So, Madam President I only call to say a big thanks to you.

President Sirleaf: Thank You!

Caller Agnes Ehsion: I want to say hello to the studio guest, Madam Ellen Johnson Sirleaf. I want to take this time to congratulate her and the people of Liberia for the bold steps we have taken so far and I know it will have an impact on persons with disability in the Republic of Liberia. So Madam Sirleaf, I want to say thank you and bravo.

President Sirleaf: Thank you, I got your message loud and clear.

Caller-Boakai Jaliebah: My concern has to do with our external debt. I learned that some people sued us for this debt. I want to know from the President how far this has gone.

President Sirleaf: Lot of that debt is what they call “Commercial debt.” That is the US $1.5 billion that we tackled and bought. It must have been up three to six hundred dollars. There is still a US $20 million segment with those who refused to sell at that price. We are working on that one also with the World Bank to see how we can settle that. These are what they called the “Boucher funds.” They bought these debts. Maybe some financial institutions or some suppliers who had debts, they bought it; we don’t know how much they bought it for. Maybe they paid one cent for it at the time because the debt was considered worthless. That means, segment of that loan is still there, and that’s part of the unfinished business that we have to address. But we are working on it.

5050 Host: you say the people bought the debt. How somebody can buy another person’s debt?

President Sirleaf: Well, the first thing goes like this. Let say a bank lends us some money. You don’t pay the bank back, the bank then will decide in their book this debt doesn’t worth anything because it will not be paid back. Somebody else comes and offers the bank. You give us this debt. Try and spread all the papers to us and we will give you one cent for every dollar. The bank says okay.

They have been holding on for all these years waiting for the country to be strong. If it goes up, some of them take you to court and they have taken us to court too. And through the debt relief program, the World Bank helped us negotiate with the people. Let me say this, many of the creditors were also very sympathetic to Liberia. I mean, they could have refused and gone to court and we would have spent lots of money to defend ourselves. So the creditors want to see Liberia succeed. Whether it’s our partner or the institution and even those hard commercial creditors that bought this debt call the Boucher Fund, even they were helpful. The Federal Reserve, which is the Central Bank in America called all of them to a meeting and said to them Liberia needs to be helped. It needs to get out of this problem so they can be able to address the need of their people. We have to thank a lot of people for what they have done for Liberia.

Caller (name inaudible): Well, I will like to congratulate the Madam for the very fine drive that has brought us thus far to reach the HIPC Completion Point. We thank her for the bold step and we know that lots of good things will follow. What I want to know is how does the audit report relate to the entire process of HIPC completion?

President Sirleaf: Look, those particular things have been looked at. I don’t know which particular issue he is talking about; but all corruption cases coming out of the GAC and some other reports, are under investigations. We are even trying to hire some firms to help us read those reports and tell us what has to do with the financial system and what has to with fraud. Those things are under investigation right now.

5050 Host: We finished with debt business. I know you get plenty things to think about; you got schools to build; you have roads and many others. What will be the first thing you will take money for?

President Sirleaf: Now, we are very concerned about our primary roads. We are concerned about the road from Gbarnga to Foya. We are even more concerned about the road from Fish Town to Harper because we are trying to get the private sector in those counties. The private sector, whether is mining, forestry or major agricultural operations is where the jobs will come from to be able to absorb any of the people who are unemployed. But it makes it very uneconomical for the private sector when they don’t have roads to get into the area. So we want to get them there so we got to try and pave those roads, so they can last; so that we don’t have to spend money every year to rehabilitate them. Those are our concentrations now. To get those particular roads paved to increase their mobility, to attract the private sector in those places. Today, we are negotiating. Sam Derby is doing so well. But they do not have to wait for infrastructure because the Cape Mount Road is good. They are doing a great job setting up a nursery for a major oil palm plantation. We have a company from Indonesia to go into the Southeast, which is Sinoe, Maryland. They went on the road and got almost discouraged. So anything we borrow will be for infrastructure. But we might be able to get money on concessional term for infrastructure. It means we will free up some of our budget money. Then, our own budget money can be used for the schools, clinics, housing and other things. This is how we intend to open the fiscal space.

5050 Host: Our time is almost off but let me ask you this. The money people owe government, what happen to it? That is the money government gave somebody to do some work and they have not paid. Will government tell them to go free too?

President Sirleaf: No, they can’t go free. That is different. If they use government money, they can’t go free. They got to do the work. They got to go to court. And don’t forget the government also has local debts, which we call “domestic debt”. When we came in it was L $900 million which they say we owe. Some of the things are boggle stocks. Yet they say we owe it. We had to vet it. We brought in people who vetted it in different category. We accepted it because probably the goods were supplied or the work was done. The ones that are questionable, which means we don’t have enough documentation to verify the claims, we will still have to accept. Some of it got to do with rent, some got to do with supply, some of it has to do with public works and many others. We have to pay that. So that’s the domestic debt we have to tackle. This one we are talking about is for the foreign debt. But also we have to do the domestic debt. Every year, we have to budget for that and pay some off. They have paid some of the small categories and I think as soon as the budget is passed, we will start to pay the next category. This is another thing that is on our head.

5050 Host: Now that the debt burden is off our backs, what do you tell your people?

President Sirleaf: We have come a long way. If you go around the country, you see what this government is doing. We don’t have to come out and say, we are doing this one in this community. But what we want to do is to get some of the journalists and some of the NGOs, civil society people, go around the country and look at what is being done. It is not just Monrovia that things are happening. Even with the kind of constraints we had, with the support of our partners, we are working. We are in charge of the country. We are not magicians. We can’t just waive magic wand and everybody have this and that. But we are working on it progressively. Year after year, there is more improvement and with the debt gone, we want to do a little bit more.

5050 Host: Thank you Madam President for responding to our call to come to Sky 107. We are very grateful for your coming and on behalf of the UNMIL Radio, Truth FM, and Power FM. We want to say we are very, very grateful.

President Sirleaf: Thank you and thank you Liberians for being with us through this poi


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