LIBERIA: US says willing to cancel debt but warns more progress needed

[ This report does not necessarily reflect the views of the United Nations]

MONROVIA, 9 Dec 2004 (IRIN) - The United States has said it wants to help war-ravaged Liberia wipe out billion of dollars of international debt and is prepared to cancel all monies owed to Washington, but more work needs to be done to improve how the West African country manages its finances.

"Other countries that have suffered war and are going through the reconstruction process like the Democratic Republic of Congo, Burundi, and Sierra Leone... are all along the path of getting debt relief. We want Liberia to get the same treatment as they have done," David Loevinger, the US Treasury Deputy Assistant Secretary, said on Wednesday.

"Liberia needs the same conditions as those countries have met. We would give them the same treatment which is 100 per cent reduction of US debts," he told reporters in the capital, Monrovia, at the end of a two-day visit.

Official figures from Liberia's central bank put the country's international debt at US $3 billion dollars.

The US treasury official said Washington had been working with global monetary watchdogs like the World Bank and the International Monetary Fund (IMF) to push for debt reduction for Liberia, which is trying to rebuild after 14 years of civil war.

"We are working with the IMF, the World Bank and the African Development Bank (ADB) to reduce Liberia's debts to these institutions. Our Congress has set aside 15 million dollars to help reduce Liberia's debt to the ADB," Loevinger said.

He explained that the United States wanted to see Liberia on the Highly Indebted Poor Countries Initiative (HIPC), which gives debt reduction for nations pursuing structural reforms.

"Liberia can not begin this process until it reengages with the IMF, the World Bank and the ADB. The IMF will be here in January and they are prepared to begin the staff monitoring program," he noted.

Liberia, the country founded by freed American slaves in the early 19th century, is currently the largest recipient of technical assistance from the Treasury Department.

But Loevinger had some strong words of warning to the transitional institutions, who have been running Liberia since an August 2003 peace deal and are charged with shepherding the country to free and fair elections in October 2005.

"Despite some very useful reforms... and the progress made, there remain too many instances where actions of a few individuals cost the Liberian people dearly and undermine the ability of donors, the IMF and the multilateral development banks to reengage," he said.

"They can not move forward until the Liberian government does a better job of addressing some financial management issues."

He said these issues included strictly adhering to budgets and managing public resources transparently.

"Too many resources still never make it into the government's budget, particularly from the port. And too much of the money collected continues to be spent outside of the agreed budgetary procedures," Loevinger said, declining to provide details.

It was the second such warning in recent days from the United States to Liberian political players against pursuing their own agendas.

The United States last week threatened to cut its aid for Liberia's post-war reconstruction if the country's transitional parliament delayed elections scheduled for October 2005 by insisting on a new census before voting could take place.

"If a few small-minded, selfish Liberians are allowed to play endless games designed to keep Liberia from keeping its end of the bargain in the peace process, there is a real possibility that our assistance will have to be re-directed," said John Blaney, the US ambassador in Monrovia.

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