Monrovia – The Liberian Senate has concurred with the House of Representatives on the ratification of the US$536 million loan agreement between the Government of Liberia and Eton Private Finance Limited.
Report by Lennart Dodoo, [email protected] and Henry Karmo, henry.karmo@frontpageafricaonlinecom
The concurrence follows Wednesday’s passage at the lower House where the agreement received a unanimous vote and one abstention.
The Central Bank of Liberia has put the government’s consolidated account on the line in order to secure the US$536 million loan from ETON Private Finance, a private company, for the construction of roads linking the country’s southeastern counties.
Putting the government’s consolidated account – the account where all remittances are made to government – up as sovereign guarantee means in the case of any default on payment, ETON, through international arbitration, can demand the government of Liberia to pay the loan through available channels, including the consolidated account.
The danger involved is that when this happens, government’s operations would be greatly affected because operational funds would be used to pay back the loan.
But members of the House of Representative who have already given green light to the passage of the agreement believe such would be preferable to giving up any of the country’s resources or foreign assets to secure the loan.
Appearing before the Senate today, Central Bank Governor, Milton Weeks, confirmed to members of the upper House that where there is default in the payment of the loan, the Central Bank would take responsibility through the consolidated account.
Public Works Minister Mabutu Nyenpan also informed members of the Senate that it has become very paramount for Liberia to secure the loan because the country’s bad road network is posing threat to national security.
He described the state of roads in the country as a national emergency that needs actions from all state actors.
A portion of the US$536 million would also be used for the construction of stadia in various regions of the country.
“We cannot continue to do business as usual, stadium is a social development,” Minister Myenpan told the Senate.
According to him, the agreement with ETON presents a unique opportunity to change the status quo.
The US$536 million loan is geared toward the construction of a coastal corridor connection of counties’ capitals road project, via the construction of the Buchanan-Cestos City to Greenville to Barclaryville Road, the Barclayville to Sasstown Road and the Barclayville to Pleebo Road. Other roads to benefit from the loan include the Medina to Robertsport Road and the Tubmanburg to Bopolu Road. Also to be constructed are ‘rest stops’ and ‘roadside service areas.’
In a communication to the Senate recently, President Weah indicated that the US$536 million loan will also include the construction of a vocational training center in Greenville, Sinoe County; construction of a mini soccer stadium in Harper, Maryland County; Barclaville, Grand Kru County; Greenville, Sinoe County, Cestos City, Rivercesss County; Zwedru, Grand Gedeh County, Robertsport, Grand Cape Mount Count and Bopolu County.
The principal amount of the loan is said to be payable in 15 years by level payment at an interest rate of 1.46 percent per annum, with a seven-year interest and principal free grace period.
The loan agreement came under several criticisms, in particular, because of the unorthodox nature under which it is being acquired. The loaner, Eton Finance Private Ltd. has no proven record of undertaking such deals before and until recently declared itself as dormant.