PHOTO: Finance Min. designate, Augustine Kpehe Ngafuan
“Prudent and disciplined debt management is not a choice; it is a necessity, and I will treat it as such,” Ngafuan declared.
Finance and Development Planning Minister designate Augustine Kpehe Ngafuan has delivered a stark assessment of Liberia’s debt burden, highlighting the critical need for disciplined and transparent debt management.
During his confirmation hearing before the Liberian Senate on Thursday Mr. Ngafuan alarmed that “as of June 2024, Liberia’s total debt had surged to a concerning $2.58 billion, with $1.078 billion (41.9%) in domestic debt and $1.50 billion (58.1%) in external debt”.
He emphasized that this level of indebtedness has elevated the ratio of the total debt stock to the country’s GDP to 56.65%, placing Liberia at a medium risk of debt distress. He warned that surpassing the crucial 60% threshold would escalate the risk, potentially limiting international financing access and tarnishing Liberia’s fiscal standing.
Ngafuan expressed worry over the escalating annual debt service obligations, which are increasingly encroaching on Liberia’s fiscal resources and impeding government priorities. He stated, “Our annual debt service obligation is consuming a larger share of the fiscal space, restricting resources for essential government initiatives.”
The minister designate underscored the importance of borrowing responsibly, emphasizing the necessity of contracting debt for projects with substantial economic benefits and favorable terms. He cautioned against acquiring debt under unfavorable conditions, which could further strain the economy.
Mr. Ngafuan emphasized the government’s obligation to service its verified domestic and external debts, highlighting that Liberia’s Public Financial Management (PFM) law prioritizes debt repayment as the primary claim on government revenue. He stressed the importance of a disciplined approach to debt repayment, coupled with a commitment to transparency and accountability in managing the country’s finances.
“Prudent and disciplined debt management is not a choice; it is a necessity, and I will treat it as such,” Ngafuan declared.
He reiterated that the government’s strategy for debt repayment must be transparent, equitable, and aligned with global best practices to prevent further financial instability.
Minister designate Ngafuan’s statement shed light on the difficulties Liberia encounters in balancing the imperative for economic growth with sound financial stewardship.
As the nation approaches a critical juncture in its debt-to-GDP ratio, the man who may shortly take over the Finance Ministry pleaded for fiscal discipline and accountability serves as a vital reminder of the significance of responsible debt management in safeguarding Liberia’s financial well-being.
Given these challenges, all eyes are now on Liberia’s financial authorities to see if they can navigate the country away from the impending threat of debt distress while sustaining economic growth.
The experience financial management expert is President Boakai’s second Finance Minister with nine months in his government. The first; Boima Kamara resigned two months ago.
The 79-year-old beat former football star George Weah in a closely contested polls in 2023.