MONROVIA (Reuters) - Liberia, fresh from having its foreign debt wiped out, is ready to borrow money again but will limit net borrowing to three percent of gross domestic product (GDP), Finance Minister Augustine Ngafuan said in an interview.
Last month the International Monetary Fund (IMF) and the World Bank said they backed a $4.6 billion debt relief programme for the West African country, trying to rebuild its economy after emerging from a 14-year war that ended in 2003.
“We are not going into an environment where we have no rules,” Ngafuan told Reuters.
“We have our own rules and we are not going to borrow more than three percent of our GDP,” he said.
Liberia, where President Ellen Johnson Sirleaf is seen seeking a second term in polls next year, is in talks with potential lenders about borrowing on concessional terms, he said, declining to give further details.
The government would not exceed the three percent cap without showing special justification to lenders, Ngafuan said.
“From the beginning we want to ensure that we get used to the discipline, so we will be running some deficit, but a deficit we can deal with at a sustainable limit.”
Ngafuan reiterated the seven percent GDP growth projection for 2010 that he gave in April. If Liberia achieves that figure, GDP would be around $1 billion.
U.S. aid agency the Millennium Challenge Corporation (MCC) earlier this month hailed Sirleaf’s economic reform efforts as a “model for progress”, awarding it a $15 million grant to promote land reforms, girls’ education and improve trade policy.
Freedom from its previous debt service and repayment obligations will give Liberia the opportunity to improve its infrastructure, the dreadful condition of which is often cited by investors as an obstacle to business in West Africa.
“The key priorities are roads, roads, roads, followed by education and health,” Ngafuan said.
“To revitalise the economy, we have to deal with our ports. As we look to the new fiscal space that will be created, we are looking at infrastructure, roads, ports, and power,”
The country wants investment into its minerals sector and is in talks with Brazilian mining firm Vale to that end, the minister said.
“Negotiations are proceeding at a good pace ... it is going to be consummated into good outcomes for the country,” he said, declining to give details of when any deal might be signed.
In June, BHP Billiton signed a $3 billion deal with Liberia to develop an iron ore project close to the Guinean border .