WASHINGTON, June 29, 2010—The World Bank's International Development Association (IDA), the part of the Bank that provides interest-free credits and grants to the poorest countries, and the International Monetary Fund (IMF) decided Tuesday that Liberia qualifies for complete debt relief.
This means that Liberia has reached the "completion point" under the Heavily Indebted Poor Countries (HIPC) Initiative and will be granted a total debt relief of US$4.6 billion.
"I have been confident that Liberia would meet the HIPC completion point despite the challenges," said Ellen Johnson Sirleaf, President of Liberia, "We concentrated on building institutions, getting laws, getting our public financial management law passed, making sure we got a general auditing commission that's functioning, and making anti-corruption effective."
Overseen by the World Bank and the IMF, the HIPC program was created in 1996 to reduce the external debt of eligible low-income countries so they can free-up additional resources to reach the Millennium Development Goals (MDGs).
The completion point marks the end of the HIPC process, which started in 2005 when the Executive Boards of the IMF and the World Bank agreed that Liberia had met the requirements for reaching the "decision point", when countries start receiving debt relief on an interim basis.
Strengthened policies and programs
Liberia's recent history is marked by years of conflict and political instability. A military-led coup in 1980 eventually led to two civil wars that left hundreds of thousands of people dead, the country's infrastructure in ruin and a generation of child soldiers traumatized.
A Comprehensive Peace Agreement was signed in 2003 and today the country is still recovering from the devastating effects of the war and related economic dislocation.
The provision of debt relief under the HIPC initiative depends on policies being in place that effectively contribute to poverty reduction. Liberia's Poverty Reduction Strategy was approved in March 2008. Since then, the Government has worked to further improve human security, supported a stronger system of national integrity and justice, strengthened civil society engagement and established the Liberia Anti-Corruption Commission.
The dilapidated infrastructure is also being reconstructed and over the past year, 650 roads have been rehabilitated and six bridges have been built. The country also made progress in the transportation, telecommunication and housing sectors. To restore health infrastructure and strengthen social welfare programs, architectural standards for hospitals, health centers and clinics were developed. And to improve the quality of education, the Government adopted a certificate for teacher training and recruited 80 trainers.
"We congratulate Liberia for the notable progress made towards this important milestone," said Obiageli Ezekwesili, the World Bank's Vice President for the Africa Region. "Despite a difficult post-conflict and challenging economic environment, the Government has undertaken critical reforms to reach the Completion Point for debt relief under the HIPC Initiative. Debt relief will reduce significantly Liberia's debt burden and free up resources needed to finance expenditures in key areas critical to meeting the Millennium Development Goals."
The World Bank remains committed to assist Liberia in reviving its economy and advancing human and social development. Just three months ago, in March 2010, Ms. Ezekwesili visited Liberia and announced additional financial and technical support. The new funding will allow for the building of a number of new facilities, including US$16 million for the Youth Employment Services project, US$2 million to the Monrovia City Corporation for Solid Waste Management, and budget support to the government in the amount of US$11 million.