World Bank Suspends Access to Unused Loans in Liberia.

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“World Bank Suspends Liberia’s Access to Undisbursed Loans Due to Loan Default”

Amid a loan repayment default of 60 days during George Weah’s administration, the World Bank has suspended Liberia’s access to “unwithdrawn loans.” The decision, communicated through a letter dated November 15 by Ousmane Diagana, Vice-President of the Western and Central Africa region at the World Bank, was addressed to Liberia’s Finance Minister Samuel Tweah. This action arrives as Liberia transitions to a new leadership under President-elect Joseph Boakai, following the recent presidential elections on October 10.

The suspension entails a temporary cessation of Liberia’s right to withdraw from Disbursing Loans and specific Trust Fund grants until the country services its debt to the Bank.

For the incoming administration, this suspension bears significant implications, notably constraining Liberia’s borrowing capacity from other financial entities. The new leadership will need to engage in negotiations with the World Bank to restructure the repayment schedule. Despite the World Bank’s acknowledgment of Liberia’s 4.8% economic growth in 2022, the nation’s fiscal situation has deteriorated, with its deficit soaring to 5.6% of GDP in 2022 from 2.4% in the previous year.

Moreover, with a debt-to-GDP ratio reaching 53.4%, Liberia faces a “moderate risk of external debt distress” and a “high risk of overall debt distress,” according to reports.

Liberia, primarily reliant on agriculture and mining, is forecasted to witness a 4.5% economic growth in 2023.

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