Liberia slowly edging towards debt cancellation

Liberia, one of the poorest countries in the world, has debts of more than 3.5 billion dollars. It is now edging towards debt cancellation, with some support from rich countries: but Liberia's debts, which are anyway of dubious legitimacy, need to be cancelled now.

Liberia's debt is well over $1000 for every woman, man and child in the country. This compares to an average daily income of just $0.33 – around 15p – per person.

Much of Liberia's debt was built up by dictator Samuel Doe in the 1980s and by Charles Taylor from 1989 to 2003. Taylor did not pay interest on existing debts, so the debt ballooned. His rule was a period of brutal civil war, with his army forcibly recruiting child soldiers to carry out massacres. Today, Liberia has a democratic government, led by Ellen Johnson-Sirleaf (Africa's first woman president), and is struggling to rebuild after the ravages of war. It should not have to pay off the old debts of brutal former rulers who were recklessly funded by rich countries.

Liberia should – finally – start getting debt relief from the Heavily Indebted Poor Countries (HIPC) initiative in mid-2007. The conditions are yet to be set, and no one knows how long it will take; but once it finishes the initiative, it will get substantial debt cancellation.

Liberian president, Ellen Johnson-Sirleaf

First, Liberia must pay off the huge arrears of around $1.5 billion that built up when it wasn’t making debt payments during the war. Rich countries are expected to provide grants to pay for this arrears clearance, which is good news. BUT concerns remain.

• Creditor help in paying off arrears must NOT be at the expense of giving aid, to Liberia or elsewhere.
• Liberia should not have to keep paying off ‘debts’ of dubious legitimacy to the World Bank and IMF, possibly for many years, whilst it goes through HIPC. (It will not have to pay the UK.)
• Liberia should not have to meet donor-imposed conditions to get debt cancellation: these can require HIPC countries to put in place controversial and often damaging economic policies.

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