President George Weah has used his first five months in office to push for a cumulative nearly one billion-dollar loan to finance his ambitious road construction projects that target the country’s southeastern region as well as the building of important access roads in Monrovia and other parts.
Weah has already submitted to the legislature for ratification, two loan agreements totalling US$962.4 million to pave an aggregate 759 kilometers of road.
Of this amount, US$536.4M is being secured through Eton Financing, while the remaining US$426M comes out of a pre-financing loan agreement between the government and Group EBOMAF, a West African construction outfit headquartered in Burkina Faso.
Regarding the agreement with Eton Financing, “the contract is for a total period of 22 years with seven of those years being a grace period in which no interest or principal is paid,” Acting Finance and Development Minister, Samora Wolokollie told legislators Monday in Monrovia during a public hearing.
“This means the first payment of $US19 million will become due on July 1 of 2025 and the second payment in December of 2025, for a yearly payment of US$38 million annually spanning 15 years starting from 2025. The interest rate here is 1.46 percent,” Wolokollie who is Deputy Finance Minister for Fiscal Affairs said.
“The Grant element of the loan is around 45 percent, meaning 45 percent of this Eton loan can be considered a grant and only 55 percent is loan. In fact because we do not pay interest during the grace period, our grant element is higher than the grant element under concessional loans normally given by our multilateral partners such as the world Bank.”
According to the Minister, the government of Liberia will pay $1.060 per km of road relative to the contract. This is about the total cost of the Redlight to Ganta-Guinea Border road project that was partly financed by the World Bank.
Wolokollie explained to lawmakers that new and unfinished debt sustainability analysis by the IMF shows that 1 billion of new borrowing on concessional terms is sustainable as long as revenue picks up over the next five to six years.
To remain within sustainable territory, he said, Liberia has to raise an additional $300 million in revenue.
As for the US$426M pre-financing agreement with EBOMAF, the loan will be financed by EuroBond and is recoverable after 15 years with a 5-year grace period and a 10-year interest only on payment, according to an Executive Mansion statement.
The agreement becomes implementable three months following its ratification when Group EBOMAF commences disbursements of funds for the road works.
Roads to be built under the EBOMAF agreement include: the Sinkor to Kesselley Boulevard elevated road, Zwedru to Greenville, Toe’s Town to Liberia-Ivorian border, and Tappita to Zwedru.
With the acquisition of these loans, “Liberia stands to gain a great deal of economic growth through the creation of jobs as well as a significant increase in Liberia’s GDP,” the Executive Mansion statement, added.