Liberia Sued in London Court for US $20M Debt

From the Liberian Daily Observer:

Two Caribbean-registered funds have launched a legal case in London, the UK, against Liberia over a debt that dates back to 1978.

Hamsah Investment and Wall Capital Limited sued Liberia at a British High Court Wednesday for a summary judgment to enforce a 2002 New York judgment for over US$20 million against Liberia.

The US$20 million represents about 5% of Liberia’s total fiscal budget for the year. The Liberian Government, led by President Ellen Johnson Sirleaf, is grappling with the challenges of post-war reconstruction and development amidst difficulties inherited from the civil war, and the effects of the recent global financial and economic crisis.

The New York Court rendered a default judgment against Liberia in 2002, at a time when the West African nation was embroiled in civil crisis.

The Liberian Government has swiftly reacted to the lawsuit by requesting a full trial and describing the plaintiffs as “vultures” that are after money from poor countries such as Liberia.

The troubling legal battle could pose serious setback to the country’s debt relief program under the Highly Indebted Poor Countries Initiative (HIPC), which was agreed upon during the Paris Club arrangement. Liberia’s total debt overhang last year was in the tune of US$5 billion.

Key line: "The US$20 million represents about 5% of Liberia’s total fiscal budget for the year."