Liberia: House Ratifies US$42.5M Financing Agreements Between Government, International Development Association
Capitol Hill, Monrovia – The House of Representatives has ratified two financing agreements in the tone of US$42.5 million between Liberia and the International Development Association (IDA).
The first agreement, in the total amount of US$8.5 million, is entitled the ‘Recovery of Economic Activity for the Liberia Informal Sector Employment Project’, and it is primarily meant to increase access to income earning opportunities for the vulnerable in the informal sector in response to the COVID-19 crisis in Liberia.
The House’s decision to pass this agreement was based on the recommendation of the Joint Committee on Ways, Means & Finance, Public Accounts and Judiciary.
The project, according to the agreement, targets four thematic areas including grant support to vulnerable households to revive or start small business, temporary employment support and employable development for vulnerable workers; capacity building and project implementation and coordination and contingent emergency response component.
It shall be implemented through the Ministry of Youth and Sports, a project implementing entity (LACE), Project Management Team and the Project financial management unit within the Ministry of Finance and Development Planning, the committee said.
For repayment, the Committee reported that it will begin in 2027 through 2059 (a 32-year period), adding that payment will be made twice a year on February 15 and August 15.
With that, the Joint Committee added that there will be 64 different payments, and each installment shall be 1.5625% of the principal amount of the credit payable.
The Committee noted the economic return of the project was favorable; taking into consideration the total debt stock of the country, the average budget size and the allowance of debt repayment; and cognizant of the devastating condition of the vulnerable people in the informal sector.
The second ratified agreement is in the tone of a combined US$34 million (US$14 million as grant and US$20 million as credit) which will be provided in the form of budget support in for fiscal year 2020/2021 in recognition of the key policy and institutional reforms that the Government of Liberia continues to make, according to the Joint Committee on Ways, Means and Finance, and Judiciary.
Of the total, US$14 million is in the form of grant, and the remaining US$20 million as credit.
The main objectives of the agreement, the Committee outlined, are to remove distortions in selected sectors and strengthened public-sector transparency, as well as promoting economic and social inclusion.
To qualify for the budget support, the Committee stated that the Government of Liberia met several benchmarks; some of which include the approval of a seed regulation by the Ministry of Agriculture to implement the Liberia Seed Development and Certification Regulations and to promote private sector participation in seed production and marketing.
In addition, the government’s national electricity regulation commission has approved a lifeline tariff policy, allowing for a progressive tariff regime to address affordability barriers for poorer population and disincentive power theft; and the submission to the Legislature and amended revenue code by the Ministry of Finance and Development Planning to streamline and consolidate duty and tax waivers, among others.
The Joint Committee, in its recommendation said: “After careful scrutiny of the agreement, the committees hereby recommend the speedy passage; so as to ensure the realization of the necessary adjustment in removing distortions in selected sectors and strengthening public-sector transparency for economic revival and growth, and the realization of the external budget support in FY 2020/2021.”