07 February 2008

UK helps Liberia take big step towards debt clearance

The UK today assisted Liberia in taking a big step towards poverty reduction by helping it clear the arrears on debt it owes to the IMF and African Development Bank (AfDB).

A total contribution of £20 million represents the UK's share of the money required to clear Liberia's long-term arrears and paves the way for Liberia to access much-needed debt relief, including permanent debt cancellation under the Multilateral Debt Relief Initiative agreed under the UK's Presidency of the G8. This will free up resources in the country to help rebuild clinics, put children back in school, and provide the foundation for economic growth.

The move by the UK government - part of a wider effort by international donors - means that Liberia can now qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. It will also let the country access much needed new development funding to help it on its road to recovery since 14 years of damaging civil war.

Liberia, where per capita income for its 3 million inhabitants is less than half a dollar a day, has a total of $4.5 billion of debt.

Liberia's arrears account for $1.5 billion (more than 10 times total government revenue) - and include $824 million to the IMF, $474 million to the World Bank and $196 million to the African Development Bank.

The Chancellor, Alistair Darling said:

"I want to congratulate Liberia on having secured the necessary financing to clear the country's arrears to the International Monetary Fund, World Bank and African Development Bank. The Liberian Government's sustained efforts over the past year to achieve this outcome have been an excellent achievement; these efforts have been crucial in mobilising the necessary support from the international community and placing Liberia firmly on the path to comprehensive debt relief. I am also pleased that the UK has been able to promote and contribute to these financing solutions, a clear demonstration of our ongoing commitment to helping the poorest countries find a comprehensive solution to their external debt problems."

International Development Secretary Douglas Alexander said:

" Liberia has made great progress on economic reform in the last couple of years, in the face of the severe post-conflict challenges facing the country.

"The UK Government's support will secure Liberia's rapid entry into the HIPC initiative, which we hope will support its reform efforts and provide much needed resources for poverty reduction.

"The UK played a key part in the international discussions that agreed the funding solutions to have Liberia's arrears cancelled and we look forward to continuing to work closely with the Liberian Government to support its economic and social recovery."

Notes to editors

1. Media enquiries about this press release should be addressed to the DfID press office on 020 7023 000.

2. Public enquiries (non-media) about this press release should be addressed to the Treasury's Correspondence and Enquiry Unit on:
Telephone: 020 7270 4558
Fax: 020 7270 4861
Email: ceu.enquiries@hm-treasury.gov.uk

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