Zoellick pledges support for post-conflict countries during Liberia visit

1 February 2008

The World Bank President also spoke of the need to “speed up the process of clearing the arrears of countries that have fallen behind in payments to multilateral lenders.”

Updated February 5, 2008

During his visit to Liberia this week, World Bank President Robert Zoellick announced that the Bank would seek to reengage with and provide financing more quickly to post-conflict countries. According to Reuters, Zoellick also spoke of the need to “speed up the process of clearing the arrears of countries that have fallen behind in payments to multilateral lenders.”

In November 2007, the World Bank facilitated the clearance of over $1.5 billion of Liberia’s back payments to the World Bank, International Monetary Fund (IMF) and African Development Bank. Groups such as Eurodad contend that the arrears should have been erased long before, particularly since “many of the credits extended to previous authoritarian governments in Liberia could easily be described as dubious or illegitimate.”

Liberian President Ellen Johnson-Sirleaf, a former World Bank employee, has enjoyed unwavering support from the World Bank, IMF and many Western governments since she was elected in 2005.

Meanwhile, the IMF announced last week that it is close to reaching an agreement on a three-year loan program with the Government of Liberia worth $920 million. According to the IMF, it will make most of the funds available to clear the country's arrears to the Fund, which amount to nearly $800 million, and then provide debt relief on that amount. New funds will amount to roughly $60 million over the three-year period.

While the documents outlining the loan agreement are not yet public, Eurodad and other observers are concerned that conditionalities within the new IMF program could be detrimental to Liberia’s recovery. Eurodad adds that any new funds from the IMF will "not be eligible for debt cancellation since international debt cancellation agreements only cover debts accumulated until end-2004."

Some critics also question the recent push by multilateral lenders such as the Bank and Fund to step up engagement in post-conflict countries, and fear that these institutions might exert undue leverage in these sensitive contexts or pursue inappropriate funding priorities.

President Zoellick is in the middle of a tour of Africa, his first since his appointment as president of the World Bank six months ago aside from a trip to South Africa. He spent one day in Mauritania, and is currently attending the African Union summit in Ethiopia. He will also visit Mozambique before returning to Washington. 

Resources

• World Bank urges post-conflict help for West Africa by Lesley Wroughton, January 30, 2008 (Reuters website)
• World Bank Group President ends two-day visit to Liberia, World Bank, January 30, 2008 (World Bank website)
• IMF reaches interim loan deal with Liberia, Reuters, January 24, 2008 (Reuters website)
• Debt relief for Liberia finally in sight, Eurodad, November 13, 2007 (Eurodad website)
• IMF cancels Liberia's debt, Bank Information Center, November 13, 2007 (BIC website)
• IMF to prioritize post-conflict countries in Africa, Bank Information Center, July 5, 2007 (BIC website)