Campaigners have welcomed debt cancellation to the world's most indebted country and called on the international community to repay their debt to Liberia in turn.
It comes as Liberia - one of the poorest countries in the world - finally received debt relief from the World Bank and the IMF yesterday (Tuesday).
Liberia is the 29th country to reach 'completion point' under the HIPC Initiative.
Completion point marks the end of the process at which time all debts run-up before the 'cut off' date are cancelled.
Relative to its income, Liberia is the most highly indebted country in the world, with foreign debt levels reaching over 1,000 per cent of its gross national income at times during the last 10 years.
Liberia is amongst the poorest 20 countries in the world. Eighty-four per cent of the population live in extreme poverty and it is ranked 169 out of 182 by the United Nations Development Programme. The country was torn apart by warlordism and civil war in the 1990s, following decades of exploitation and unjust lending by the US and other rich countries.
Nick Dearden, Director of Jubilee Debt Campaign said: "We are delighted that Liberia has had 90 per cent of its debts cancelled at last. The country should never have waited so long for the wheels of the debt relief schemes to turn. As with so many other countries, debt cancellation for Liberia has meant sizeable debt payments as well as implementation of IMF conditions.
"The people of Liberia have suffered twice over - once from vast quantities of unjust debts which propped up dubious governments without benefiting ordinary people, and second from being forced to forgo development while those debts were 'repaid'.
"It is the international community that surely owes Liberia a debt for 200 years of mistreatment. We hope that this cancellation represents a new beginning for Liberia in which that debt is repaid through increased levels of aid without damaging conditions."
Others suggested that more now needed to be done to prevent corruption in the post-conflict country. Global Witness is calling upon the Government of Liberia to promote better financial governance by implementing the recommendations of audits carried out as part of the Heavily Indebted Poor Countries (HIPC) process.
Five key ministries were audited by the Liberian Government’s General Auditing Commission as a requirement under HIPC, including the Ministry of Lands, Mines and Energy. Campaigners said that reforms in the latter are particularly important to ensure accountability and transparency in the mining sector.
“Being granted debt relief is an important step on Liberia’s road to economic recovery. The next will be to ensure that revenue from Liberia’s natural resources is not lost to corruption and mismanagement but instead helps to fund the country’s reconstruction,” said Natalie Ashworth, campaigner for Global Witness.
An audit of the Ministry of Lands, Mines and Energy reported financial irregularities amounting to over US$2.8 million. It also identified major weaknesses in the internal controls within Liberia’s diamond sector. These threaten the Government’s ability to implement the Kimberley Process – the international certification scheme to prevent the trade and export of conflict diamonds. The audit recommends that the mining ministry provides receipts for its unexplained expenditures and ensures that the Kimberley Process guidelines are followed.
HIPC aims to ensure that no poor country faces a debt burden it cannot manage. The debt relief should free up resources to fund Liberia’s reconstruction effort following years of resource-fuelled conflict.
“The Liberian government will only be able to make the most of this debt relief and harness the revenue from the country’s natural resources if it gets serious about stamping out corruption, institutes the necessary financial controls and implements the findings of the audit of the mines ministry,” said Ashworth.