Liberia: U.S.$770m Fake Debts

A comprehensive audit by the General Auditing Commission (GAC) has uncovered massive irregularities in Liberia’s domestic debt portfolio, revealing that approximately US$770 million in claims dating back to 1980 are invalid or unverified. The findings, detailed in a report released recently, paint a stark picture of the country’s long-standing challenges in public financial management and debt accountability.

The audit, which reviewed a total of 1,083 domestic debt claims totaling US$871,529,053 over a period of 44 years, found that only 133 claims — equivalent to US$101,771,823 — were properly verified and documented. In stark contrast, 950 claims, amounting to US$769,757,230 or roughly 88% of the total, were deemed invalid due to lack of documentation, inconsistencies in records, and unverifiable information.

These findings have raised serious concerns about Liberia’s domestic debt management system, which experts say has been plagued by weak institutional oversight, poor record-keeping, and systemic inefficiencies over decades. The report highlights that many of the unverified claims involve alleged payments to contractors, suppliers, and financial institutions, some of which date back decades, yet have no legal or contractual basis to substantiate the debt.

The GAC’s report stresses that the accumulation of unverified domestic debt poses significant fiscal risks to the Liberian government. If left unaddressed, these claims could increase debt servicing costs, distort budget planning, and undermine investor confidence in the country’s economy.

“This audit is a wake-up call for the government and all stakeholders involved in managing public resources,” said the Auditor General P. Garswa Jackson, Sr. “It is imperative that Liberia undertakes urgent reforms in debt verification, record management, and financial governance to protect the public purse and restore confidence in our institutions.”

Liberia’s domestic debt management has been a persistent challenge for decades, complicated by periods of political instability, civil conflict, and weak institutional capacity. Historical audits have often revealed discrepancies in financial records, and the GAC’s latest findings reinforce concerns about the long-term mismanagement of public finances.

Experts note that domestic debt mismanagement is not only a technical issue but also a governance problem. The absence of proper documentation, the failure to reconcile old claims, and the lack of oversight have allowed questionable claims to accumulate over the years, burdening the government and threatening economic stability.

“This is not just about numbers,” said an economist familiar with Liberia’s fiscal policy. “We are talking about the misallocation of scarce public resources, the potential for corruption, and the risk that future generations may bear the cost of mistakes made decades ago. Proper verification and reconciliation of domestic debt is crucial to safeguard Liberia’s economic future.”

In response to the audit findings, the GAC has urged the Ministry of Finance and Development Planning (MFDP), the Central Bank of Liberia, and other relevant agencies to conduct a full reconciliation of all domestic debt records. The report recommends stricter debt verification protocols, including thorough documentation, legal vetting, and transparent reporting of all debt-related transactions.

The Auditor General emphasized that these steps are not merely administrative but essential for the country’s financial stability. “Every claim must be properly substantiated, and unverified debts should be immediately flagged for further investigation. Liberia cannot afford to continue servicing debts that are not legally or financially validated,” the Auditor General noted.

The implications of the audit are far-reaching. Liberia’s economy, still recovering from the effects of past civil conflicts and global economic shocks, relies heavily on fiscal discipline and prudent debt management. The discovery of nearly US$770 million in invalid claims could prompt a reevaluation of the country’s debt strategy, particularly regarding domestic borrowing.

Financial analysts warn that the mismanagement of domestic debt can have ripple effects across the economy. It can strain the national budget, divert funds from essential public services, and hinder investment opportunities. International donors and investors closely monitor debt transparency, and such findings could affect Liberia’s credibility in global financial markets.

“This audit demonstrates the urgent need for reforms in Liberia’s financial governance,” said a senior policy analyst. “Transparent debt management is a cornerstone of economic stability, and failure to address these discrepancies could have severe consequences for Liberia’s fiscal health and international reputation.”

Liberia’s government has previously initiated measures to strengthen financial governance, including improvements in public financial management systems and efforts to modernize record-keeping. However, the GAC’s audit shows that these reforms have yet to fully address historical inconsistencies in domestic debt claims.

Moving forward, experts recommend a multi-pronged approach: comprehensive reconciliation of all past debt claims, establishment of a centralized debt registry, implementation of strict verification protocols for all new borrowing, and regular audits by independent institutions.

“Liberia must adopt a zero-tolerance approach to unverified domestic debt,” the Auditor General said. “This is essential not only for accountability but also for maintaining public trust and ensuring that government resources are used effectively for the benefit of all Liberians.”

The audit is expected to prompt heightened parliamentary oversight, with lawmakers calling for hearings and investigations into the management of domestic debt. Civil society organizations and the media are also likely to play a critical role in ensuring that the findings lead to meaningful action.

The GAC report underscores the importance of transparency, accountability, and strong legal frameworks in public financial management. It is a decisive step toward addressing decades of mismanagement and ensuring that Liberia’s domestic debt obligations are legitimate, verifiable, and sustainable.

The revelation of $770 million in invalid domestic debt claims is a stark reminder of Liberia’s ongoing challenges in fiscal governance. As the government and stakeholders grapple with these findings, the path forward will require decisive action, institutional reform, and a commitment to transparency.

Failure to act could perpetuate fiscal vulnerabilities, increase debt servicing burdens, and undermine confidence in Liberia’s financial systems. Conversely, rigorous debt verification and improved governance can strengthen Liberia’s economy, safeguard public resources, and restore trust in the country’s institutions.

The GAC audit has set the stage for a new chapter in Liberia’s financial management–one that emphasizes accountability, transparency, and sustainable debt practices, ensuring that past mistakes do not continue to burden future generations.

By Liberian Observer.