Fact Checking 2023 SONA: IMF Does Not Rate Liberia’s Total Debt Distress at ‘Moderate Risk’

Monrovia – In fulfillment of Article 58 of the Liberian Constitution, President George M. Weah on January 30, 2023, delivered his 6^th annual report to the 54^th Legislature on Capitol Hill.

Report By: Varney Kelvin Sirleaf | LVL Fact Checker

The President, in his report to the legislature, claimed that the International Monetary Fund (IMF) has upgraded Liberia’s debt rating to “moderate risk of total debt distress”.

Said President Weah: “I am pleased to inform you that a recent debt sustainability analysis by the IMF has upgraded Liberia’s debt management rating from high risk of total debt distress to moderate risk of total debt distress”.

According to the global think tank ODI, being in debt distress means that a country is experiencing, or is about to experience, a ‘distress event’ such as being unable to meet the repayments due to its creditors

But how Did the IMF Rate Liberia’s Debt Management?

In our search to find out the IMF rating of Liberia’s debt management, we found a joint report of Liberia’s debt sustainability analysis written by the IMF and the International Development Association (IDA).

The IMF Debt Sustainability Analysis, which was published on the IMF website on September 14, 2022, covers both domestic and external public sector debt which includes central government debt, central government guaranteed debt, and central bank debt contracted on behalf of the government.

In the IMF Debt Sustainability Analysis, Liberia’s external debt distress is rated at “moderate risk” while the overall public debt distress is rated at “high risk”.

Also, the World Bank “latest publicly available debt sustainability analysis” under the joint Bank-Fund debt sustainability framework for low income countries shows that Liberia’s risk of external debt distress is rated at “moderate” and the risk of overall debt is rated at “high”.

Considering that external debt is the portion of a country’s debt that is borrowed from foreign lenders, and that the overall debt is a combination of both external and domestic debts, it is out of context and misleading to consider the rating of the external debt distress as the Total Debt Distress.

Conclusion

The IMF Debt Sustainability Analysis of Liberia’s debt management assesses Liberia at moderate risk of external debt and high risk of overall public debt distress with limited space to accommodate shocks.

Also, the World Bank latest publicly available debt sustainability analysis rates the overall debt distress of Liberia at “high risk” and not “moderate” as claimed by President Weah.

The claim as made by President George Weah that the IMF upgraded Liberia “total debt distress rating from high risk to moderate risk” is incorrect.