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Debt Management

The Debt Management Section was previously under the Office of the Comptroller-General of the Republic of Liberia, and headed by a deputy comptroller. Prior to its establishment, the functions of the Unit were performed by the then Bureau of General Accounting, now the Accounting Services Unit. The functions of Debt Management at the time performed by the Bureau of General Accounting were mainly the recording of transactions (i.e. debt service payments and disbursements), specifically at the time cash was actually received.

Along the line, the section was detached from the Office of the Comptroller General and became an independent Unit, directly reporting and answerable to the Assistant/Deputy Minister for Expenditure and Debt Management and the Minister of Finance. The rationale behind the transition of the Unit was occasioned by Government’s priority to addressing the country’s debt issue through the HIPCs initiative and the Domestic Debt Resolution Strategy.

Debt management being dynamic and evolving based on its stated meaning that: “it is the technical, as well as the institutional arrangements involving in organizing both domestic and the external liabilities so that the debt service burden is maintained and contained within a sustainable threshold”, the Debt Management Unit has again been restructured under the Department of Economic Management, headed by a director, within the new MFDP.

The Role of Debt Management Unit

Part V of the Public Financial Management Act of 2009 title: “Borrowing, Public Debt, Government Guarantees and Aid Management”, Section 28.4 of the captioned title stipulates: “There shall be established a Debt Management Committee consisting of the Minister of Finance as Chair, the Governor of the Central Bank, the Minister of Justice, and two other members appointed by the President, while Section 32.1 also stipulates: “The Minister is required to maintain up-to-date records of all public debt, including guarantees. Records and information on details of holders of government securities will be maintained by the Central Bank of Liberia”.The citation of the referenced title and sections of the Public Financial Management Act of 2009 herein justifies why the Debt Management Unit is the Secretariat to the Debt Management Committee to ensure that records of public debt and government guarantees are properly kept and updated as well as proper minutes recorded of the Committee’s regular deliberations.

The Unit facilitates the Debt Management Committee in loan negotiations to ensure that elements such as: establishing a financial framework; securing the necessary financial terms; ensuring the legal acceptability of loan contracts and ensuring the administrative acceptability of loan contracts. Reference to utilization of loan proceeds, it is within the purview of the Unit to ensure in some cases the preparation of on-lending contracts; in some cases, to ensure the provision of local counterpart funds to external financing; in some other cases, to ensure modifications to loan contracts if necessary (i.e. deferring final date for disbursement); ensuring the disbursement and utilization of borrowed fund; ensuring payments to suppliers under loan contract and, follow-up on undisbursed committed amount when necessary.

Under the debt servicing aspect of the function of the Unit, debt service payments are made according to schedule, while schedules, checking and follow-up to budget allocation for debt servicing are regularly updated. The Unit is also responsible for the design and publication of an annual borrowing plan, based on the medium-term debt management strategy (MTDS), to be presented with the Budget.

 

 
 
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