The agreement is based on a multilateral framework agreement concluded in the Paris Club, a forum for creditor countries, in April last year. Liberia’s debt treatment in the Paris Club is part of the international initiative to reduce the debts of the poorest and most indebted countries, known as the Heavily Indebted Poor Countries Initiative (HIPC).
Liberia’s remaining debt to Norway, about $3.7 million USD, will be cancelled when the country reaches the Completion Point under the HIPC initiative, which the Government of Liberia is aiming to achieve in early 2010. Completion Point is reached when the government enacting implements agreed-upon reforms, mainly concerning the Government’s debt management capacity and improved public financial management.
Minister Ngafuan thanked Norway for its generous debt cancellation, which went beyond the minimum requirements set by the Paris Club. “The Government of Liberia inherited an enormous debt burden from the past and we thank Norway for recognizing that debt cancellation will allow the country to administration to focus on the many challenges of today,” commented the Minister. “In the last year, the Government of Liberia has managed to clear nearly $1.5 billion dollars of arrears. This agreement with Norway is another important step to resolving our large and complex debt situation.”
Ambassador Lundemo expressed her satisfaction that the long awaited debt cancellation is finally carried out and stated that this cancellation together with the corresponding cancellation by the other creditor countries will give Liberia a fresh start in its economic development
In accordance with the Norwegian Debt Relief Strategy, the debt was cancelled without using any funds from the Norwegian development budget. The cancellation does not therefore affect other development assistance from Norway. Norway is supporting Liberia with an average of USD 20 Million pr year, mainly in the electricity sector with power generation in Monrovia and support and capacity building for the Ministry of Lands, Mines and Energy and for Liberia Electricity Corporation (LEC). Other major receipients of Norwegian support are the Liberian National Police, the Millenium Development Village in Kokoya District, the Clinton Foundation National Health and HIV/AIDS Project, the Norwegian Refugee Council (NRC) for humanitarian purposes and UNDP for the Rehabilitation and Reintegration of ExCombattants.