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World Bank suspends Liberia's access to loans over failure to meet its debt payment obligations
 
By: Abara Blessing Oluchi
Fri, 24 Nov 2023   ||   Liberia, Liberia
 

Liberia faces a setback as the World Bank suspends its access to "unwithdrawn loans" due to the George Weah administration's failure to service previously disbursed loans, marking a significant development in the country's financial landscape.

The decision to suspend Liberia's access to these loans was conveyed in a letter from Ousmane Diagana, Vice-President of the Western and Central Africa region at the World Bank. This action comes in response to the Weah administration's inability to meet its debt payment obligations with the Bank.

Diagana's communication cited the Bank's prior notification to Finance Minister Samuel Tweah on October 31, 2023, regarding their intent to suspend withdrawals under effective but unwithdrawn International Development financings, project Preparation facility advances, and Institutional Development Fund grants. Additionally, this suspension extends to certain grants and loans funded under trust funds administered by the Bank, potentially impacting projects within Liberia.

As of November 15, Liberia's right to further withdraw from the Disbursing Loans and specific Trust Fund grants and loans has been temporarily halted. However, the Bank noted that exemptions exist for withdrawal applications submitted on or before 90 days after the Suspension Date, covering payments to suppliers and contractors for services carried out within 60 days post-suspension. Likewise, payment requests from commercial banks holding special commitments issued by the Bank before the suspension date are exempted from this suspension.

The Bank said: "With utmost regret, we inform you that, pursuant to the General Conditions or Standard Conditions (as the case may be and as defined in the agreement providing for the respective Disbursing Loan) applicable to each of the Disbursing Loans, the Bank suspends as of 12:01 am., Washington, D.C. time November 15, 2023 : (a) the right of the respective borrower(s) thereof to make any further withdrawal of unwithdrawn amounts under the Disbursing Loans; and (b) the right of the respective recipient(s) thereof to make any further withdrawal of unwithdrawn amounts under the following Trust Fund grants and loans("Disbursing TF Grants/Loans") (the Disbursing Loans and the Disbursing TF Grants/Loans, collectively, the "Suspended Loans")..."

During this suspension period, the Bank stated that no disbursements will be made to the designated accounts of the suspended Loans, while applications for eligible expenditures must continue to be submitted to the Bank. The Bank will consider direct payments or reimbursements only after confirming that designated account balances have been fully utilized for Exempted Items expenditures.

The World Bank will continue withdrawing from the loan account of relevant suspended loans to pay amounts requested by commercial banks under outstanding special commitments issued by the Bank before the suspension date. All other restrictions applicable to payments overdue by forty-five days will persist until Liberia and other borrowers become current on all payments owed under the suspended loans, including those overdue by thirty days or more, the Bank said.

Expressing regret for the necessity of this action, the World Bank emphasized that the suspension hinges on settling all outstanding payments. A swift resolution is hoped for, aiming to resume withdrawals and support crucial operations in Liberia.

Contractors and suppliers under Bank-financed contracts have been urged to acknowledge this suspension, as it holds significant implications for ongoing and future projects in Liberia, potentially affecting the country's economic development.

The World Bank's decision underscores its commitment to financial discipline and member countries fulfilling their obligations. As Liberia endeavors to resolve outstanding payments, the international community will closely monitor developments, recognizing the cooperative efforts needed for sustainable development goals.

'Not a good start for Boakai'

Meanwhile, this suspension comes as Liberia is expected Liberia is expected to usher in a new government led by President-elect Joseph Boakai following victory over incumbent George Weah in the just ended presidential election runoff.

The new administration will need the support of the World Bank to continue the implementation of these important projects that are being affected, including the southeastern corridor road project, smallholder agritranse. & agribus, urban water supply project, rural economic transformation project, regional emergency power intervention, improving results in secondary education, Cheesemanburg Landfill & Urban Sanitation project and the Liberia Forest Sector Project.

 

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