top of page
  • Writer's pictureMarie S.

Managing Liberia's High Debt External Debt Burden

Liberia has a high external debt burden that poses significant challenges to its economic development. In 2021, the country's external debt stock was estimated at US$3.6 billion, or 52.5% of GDP [1]. The majority of Liberia's external debt is owed to multilateral creditors, such as the World Bank and the International Monetary Fund (IMF).

The high level of external debt has a number of negative consequences for Liberia's economy. First, it crowds out private investment, as the government has to compete with the private sector for scarce capital. Second, it increases the country's vulnerability to external shocks, such as changes in interest rates or commodity prices. Third, it can lead to debt distress, which can have a devastating impact on the economy.

In order to manage its debt burden, Liberia has adopted a number of policies and strategies. These include:

  • Issuing long-term debt with concessional terms. This helps to reduce the country's debt service burden.

  • Concentrating on debt relief. Liberia has received significant debt relief from multilateral creditors, which has helped to reduce its debt burden.

  • Improving debt management capacity. The government has taken steps to improve its debt management capacity, including establishing a Debt Management Unit (DMU).

The DMU is responsible for developing and implementing the government's debt management strategy. It also monitors the country's debt portfolio and reports to the Ministry of Finance and Development Planning (MFDP).

The MFDP is responsible for overall economic policy, including debt management. The ministry works closely with the DMU to ensure that the government's debt management policies are aligned with its economic objectives.

The government's debt management policies and strategies have been successful in reducing the country's debt burden. However, there are still challenges that need to be addressed. These include:

The need to continue to improve debt management capacity. The DMU is still relatively new, and it needs to continue to develop its capacity to manage the country's debt portfolio.

The need to diversify the country's debt portfolio. Liberia's debt portfolio is heavily concentrated in multilateral creditors. This makes the country vulnerable to changes in the policies of these creditors.

The need to reduce the country's reliance on debt financing. The government needs to find ways to finance its development needs without relying on debt. This could include increasing domestic revenue mobilization and attracting foreign direct investment.

The government of Liberia is committed to managing its debt in a sustainable manner. The policies and strategies that have been adopted have been successful in reducing the country's debt burden. However, there are still challenges that need to be addressed. The government is working to address these challenges, and it is committed to ensuring that Liberia's debt is sustainable.

Liberia has a high external debt burden that poses significant challenges to its economic development. It is essential to analyze the country's debt management policies and strategies to ensure that the debt burden is sustainable.

Liberia's external debt has been on an upward trajectory in recent years, as reflected in the steady increase in the country's external debt stock. In 2018, Liberia's external debt stood at $1,157,572,897, which increased by 3.53% to $1,266,753,402 in 2019. This upward trend continued, with the external debt further rising by 15.05% to $1,457,426,336 in 2020. The most significant year-on-year increase occurred in 2021, with external debt reaching $1,846,315,347, marking a 26.68% increase from the previous year​ [2].

The rising external debt stock is concerning and necessitates a careful examination of Liberia's debt management strategies. Prudent debt management policies can help ensure that the country's debt burden is sustainable and that borrowing is aligned with the country's development objectives. This would involve balancing the need for investment in development projects with the ability to service debt obligations in a timely manner. Additionally, it is essential for Liberia to explore diverse sources of financing, including domestic revenue mobilization, to reduce dependency on external borrowing.

As of the third quarter of 2022, Liberia's external debt reached 1121.60 USD Million, showing an increase from 1097.23 USD Million in the second quarter of the same year​[2]. ​Historical data reveals that external debt in Liberia has fluctuated significantly over the years, with an average of 657.02 USD Million from 2009 to 2022. Liberia's external debt peaked at an all-time high of 1681.92 USD Million in the third quarter of 2009 and dropped to a record low of 222.80 USD Million in the fourth quarter of 2010 [3].

Projections for Liberia's external debt indicate that it is expected to be 739.96 USD Million by the end of the current quarter. In the long-term, the external debt is forecasted to trend around 771.78 USD Million in 2024 and 801.88 USD Million in 2025 ​[3]. These projections suggest a moderate increase in Liberia's external debt over the next few years.

Given the significant burden of external debt, it is crucial for Liberia to carefully manage and implement strategies to ensure debt sustainability. This includes prudent borrowing practices, prioritizing investments that contribute to economic growth, and strengthening domestic revenue mobilization. Additionally, effective debt management practices may include seeking concessional financing, engaging in debt restructuring, and promoting transparency and accountability in public financial management.

In conclusion, Liberia's high external debt levels underscore the need for sound debt management policies to ensure long-term economic stability and growth. Policymakers should focus on measures that enhance debt sustainability while fostering an environment conducive to investment and economic development. The data indicate that Liberia faces significant challenges in managing its external debt. To ensure long-term economic stability, the country must implement measures to curb the rate of debt accumulation and improve its ability to manage and service its external debt. Liberia's external debt has been a persistent concern for the country's economic stability.


[1] International Monetary Fund (2022). Liberia: Staff Report for the 2022 Article IV Consultation and Fourth Review of the Extended Credit Facility Arrangement, Requests for Waiver of Nonobservance of Performance Criterion, and Rephasing of Access—Debt Sustainability Analysis. Washington, D.C.: International Monetary Fund.

[2] Liberia External Debt 1970-2023 | MacroTrends

[3] Liberia Public External Debt - 2023 Data - 2024 Forecast - 2009-2022 Historical


Get Involved

Do you have additional facts to add to this insight or have an opinion that you would like to express?

Email Us

16 views0 comments


bottom of page