LONDON (Reuters) - Liberia has "medium-term" plans to launch an international bond but will first seek a debt rating which it anticipates will be in the single-B category, the West African country's finance minister said on Wednesday.
Several other African sovereigns, including Zambia, Rwanda and Tanzania, have launched well-received debut dollar bonds in the past couple of years, with investors attracted by the high yields and increasing wealth and political stability on the continent.
"We have plans to raise funds in the international markets, that is part of the modernisation of the financial markets in Liberia," finance minister Amara Konneh said in an interview with Reuters in London after receiving an award from The Banker magazine for African Finance Minister of the Year.
"This is a medium-term plan."
More than 10 years after a brutal 14-year civil war ended, the West African country's economy is growing fast and should expand nearly 7 percent this year. Liberia, however, has a little-developed local capital market, with no domestic debt of longer maturity than Treasury bills, and no stock exchange.
Konneh said he would hold discussions about possible issuance next week on the sidelines of the World Economic Forum meetings in Davos, Switzerland.
The size of the bond had not yet been decided, he said. Liberia would first seek a rating from international ratings agencies before issuing debt, Konneh said, and was already taking guidance on this from market specialists.
"This year we are going to put that on the fast track," Konneh said, adding that Liberia would expect to receive a B rating. A "B" rating would put the country on a par with other African economies, and would make it a better credit than twice-bailed-out Greece.
However, Liberia's three-year extended credit facility with the IMF, approved in late 2012, urges Liberia to only borrow at non-market, concessional rates.
A review of the programme in December said the country was already approaching its debt limit under the agreement and urged the government to slow new borrowing.
Konneh has said that the government's actual debt level is rising slowly because, although it has arranged $778 million in new loans, only $83 million has actually been disbursed so far due to the time needed to get projects off the ground.
OIL WEALTH
The government is drawing up legislation to preserve possible future oil wealth for future generations, Konneh said, although no oil will come on stream before President Ellen Johnson-Sirleaf's term ends in 2017. Liberia has offshore oil deposits.
Liberia is looking at various models of wealth fund, including Norway's, the world's most transparent sovereign wealth fund, Konneh said. But he said it was important for the country to avoid so-called "Dutch disease", in which economies allow other industries to decline due to overdependence on energy exports.
"We have to continue to invest in the alternatives, and those alternatives are to quickly diversify the economy ... we want to learn from others' mistakes." Liberia needed to rebuild its rubber sector, where production has fallen, Konneh said, along with coffee and cocoa, and also build up the tourism and services sectors.
Asked if he would consider running in presidential elections in 2017, Konneh said he was focusing on being the best finance minister he could for now. "Whether I have ambitions on that, I haven't decided."
He also said the government was working to improve governance in the resource sector. Almost all the $8 billion worth of contracts involving oil, mining, agriculture and forestry signed by Liberia since 2009 have violated its laws, according to a report commissioned by the government last year.
In the mining sector, Konneh said the world's biggest steelmaker ArcelorMittal will have to share the Liberian rail line it is using to export iron ore with Sable Mining and other miners in Guinea who request access.
President Johnson-Sirleaf has come under fire for appointing several members of her family in her administration, including her son Charles Sirleaf at the central bank. But Konneh said Charles Sirleaf's work at the central bank pre-dated her presidency.
"Charles Sirleaf has a long tenure at the central bank. He worked at the central bank way before President Sirleaf became president," Konneh said. "It would be unfair to him for his mother to say 'leave the central bank because I am president'."
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Several other African sovereigns, including Zambia, Rwanda and Tanzania, have launched well-received debut dollar bonds in the past couple of years, with investors attracted by the high yields and increasing wealth and political stability on the continent.
"We have plans to raise funds in the international markets, that is part of the modernisation of the financial markets in Liberia," finance minister Amara Konneh said in an interview with Reuters in London after receiving an award from The Banker magazine for African Finance Minister of the Year.
"This is a medium-term plan."
More than 10 years after a brutal 14-year civil war ended, the West African country's economy is growing fast and should expand nearly 7 percent this year. Liberia, however, has a little-developed local capital market, with no domestic debt of longer maturity than Treasury bills, and no stock exchange.
Konneh said he would hold discussions about possible issuance next week on the sidelines of the World Economic Forum meetings in Davos, Switzerland.
The size of the bond had not yet been decided, he said. Liberia would first seek a rating from international ratings agencies before issuing debt, Konneh said, and was already taking guidance on this from market specialists.
"This year we are going to put that on the fast track," Konneh said, adding that Liberia would expect to receive a B rating. A "B" rating would put the country on a par with other African economies, and would make it a better credit than twice-bailed-out Greece.
However, Liberia's three-year extended credit facility with the IMF, approved in late 2012, urges Liberia to only borrow at non-market, concessional rates.
A review of the programme in December said the country was already approaching its debt limit under the agreement and urged the government to slow new borrowing.
Konneh has said that the government's actual debt level is rising slowly because, although it has arranged $778 million in new loans, only $83 million has actually been disbursed so far due to the time needed to get projects off the ground.
OIL WEALTH
The government is drawing up legislation to preserve possible future oil wealth for future generations, Konneh said, although no oil will come on stream before President Ellen Johnson-Sirleaf's term ends in 2017. Liberia has offshore oil deposits.
Liberia is looking at various models of wealth fund, including Norway's, the world's most transparent sovereign wealth fund, Konneh said. But he said it was important for the country to avoid so-called "Dutch disease", in which economies allow other industries to decline due to overdependence on energy exports.
"We have to continue to invest in the alternatives, and those alternatives are to quickly diversify the economy ... we want to learn from others' mistakes." Liberia needed to rebuild its rubber sector, where production has fallen, Konneh said, along with coffee and cocoa, and also build up the tourism and services sectors.
Asked if he would consider running in presidential elections in 2017, Konneh said he was focusing on being the best finance minister he could for now. "Whether I have ambitions on that, I haven't decided."
He also said the government was working to improve governance in the resource sector. Almost all the $8 billion worth of contracts involving oil, mining, agriculture and forestry signed by Liberia since 2009 have violated its laws, according to a report commissioned by the government last year.
In the mining sector, Konneh said the world's biggest steelmaker ArcelorMittal will have to share the Liberian rail line it is using to export iron ore with Sable Mining and other miners in Guinea who request access.
President Johnson-Sirleaf has come under fire for appointing several members of her family in her administration, including her son Charles Sirleaf at the central bank. But Konneh said Charles Sirleaf's work at the central bank pre-dated her presidency.
"Charles Sirleaf has a long tenure at the central bank. He worked at the central bank way before President Sirleaf became president," Konneh said. "It would be unfair to him for his mother to say 'leave the central bank because I am president'."
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