You might have heard in the news recently that Liberia bought back $1.2 billion worth of debt from commercial creditors (including 'vulture funds'). Amazing, as this was arranged at about 3 cents on the dollar - a huge negotiated discount (the largest ever on developing country commercial debt apparently). With the negotiated buy back, they paid the debt thanks to some money from World Bank and several countries. Here's a synopsis.
Along with this commercial debt, there's the multilateral and bilateral debts, and domestic debt. Liberia's debt burden was and is still pretty onerous. I've been looking at the debt numbers lately; even after debts written off through HIPC decision point and other negotiations, Liberia's external debt stood at about $3 billion just a few weeks ago. That's over 3 1/2 times GDP! (As GDP is currently measured - it may be somewhat understated, but the debt burden is still pretty big. Compare this to the recent eyebrow-raising news about UK increasing its borrowing to about 80 per cent of GDP.) With this commercial debt buy back, and with the achievement of HIPC completion point (expected next year), most of Liberia's external debt will be erased. And then it can get back to a sustainable debt position and start thinking about borrowing again. (For now, it is faced with a zero-borrowing constraint; even within year to smooth cash flow and even from the Central Bank.)
In other news, Ellen Johnson Sirleaf, I heard, made an appearance on The Daily Show. She also has a new book out, which I'm guessing she's promoting?
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