MONROVIA – Liberia’s growing non-performing loans problem is emerging as a wider economic threat, with Vice President Jeremiah Kpan Koung warning that unpaid and distressed loans are restricting access to credit, increasing the cost of borrowing and limiting the ability of businesses and entrepreneurs to expand.
Koung made the warning Friday in Monrovia while closing the National Conference on the Resolution of Non-Performing Loans in the Liberian Financial Sector, where he presented the government’s response to a problem he said reaches far beyond the balance sheets of commercial banks.
According to the Vice President, non-performing loans are affecting the capacity of Liberia’s financial institutions to extend fresh financing to productive sectors of the economy.
The consequences, he said, are being felt by businesses, entrepreneurs, farmers, depositors and ordinary Liberians who depend on access to finance to invest, expand their activities and create livelihoods.
“Resolving non-performing loans is not simply about improving commercial bank balance sheets; it is about unlocking economic opportunity, expanding access to finance, encouraging investment, supporting entrepreneurship, and creating jobs for the Liberian people,” Koung said.
His remarks placed access to affordable credit at the center of the government’s response to Liberia’s bad-loan problem.
When financial institutions are carrying high levels of loans that are not being repaid as expected, their ability to extend new financing can become constrained. Banks may become more cautious about lending, while borrowers can face higher costs and tougher requirements.
For a country seeking greater private-sector participation and job creation, Koung said such conditions can become a major obstacle to economic expansion.
He explained that elevated non-performing loans constrain lending, restrict private-sector growth, increase the cost of credit and undermine economic growth.
The problem also has implications for sectors that the government wants to see become engines of inclusive growth.
Koung specifically highlighted micro, small and medium-sized enterprises, women-owned businesses, young entrepreneurs, agricultural value chains and underserved communities as areas requiring improved access to financing.
These groups, he said, must be able to access financing if Liberia is to expand economic opportunity beyond established businesses and institutions.
The government therefore intends to combine measures for resolving existing bad loans with reforms designed to improve the overall quality of lending and borrowing in the country.
Vice President Koung announced that President Joseph Nyuma Boakai has directed the establishment of a National Non-Performing Loans Task Force to coordinate the national response.
The Task Force will include the Central Bank of Liberia, Ministry of Finance and Development Planning, Ministry of Justice, financial institutions, government agencies, development partners, technical experts and other relevant stakeholders.
Its mandate will include coordinating efforts to address legacy non-performing loans while strengthening systems designed to prevent the emergence of new bad loans.
Koung said President Boakai has instructed the relevant institutions to move expeditiously to finalize the Task Force’s membership, terms of reference and implementation action plan.
The action plan, he said, must establish clear responsibilities and timelines while creating mechanisms for monitoring and reporting progress.
The announcement came after conference discussions identified a number of structural weaknesses contributing to Liberia’s non-performing loan problem.
Among them are weaknesses in credit infrastructure, legal and judicial bottlenecks, governance challenges, gaps in enforcement mechanisms and wider economic conditions.
The Vice President’s remarks suggest that resolving the problem will therefore require more than asking borrowers to repay outstanding obligations.
It will also require improvements in the systems through which loans are assessed, secured, recovered and enforced.
The government is supporting measures to strengthen prudential supervision, credit-risk management and Liberia’s credit infrastructure.
Koung also endorsed reforms involving debt recovery, insolvency administration, collateral enforcement and commercial dispute resolution.
At the same time, he stressed that financial reform must balance credit discipline with fairness, transparency and consumer protection.
Financial institutions, he said, have a responsibility to strengthen governance, improve underwriting standards and enhance risk management.
Borrowers, on the other hand, must honor their financial commitments and contribute to a stronger culture of repayment and accountability.
Government agencies will have to improve policy coordination, while the Legislature is expected to consider legal reforms needed to strengthen the financial system.
The Judiciary will also have a role in improving contract enforcement and commercial justice, particularly where legal delays affect the recovery and resolution of distressed loans.
Development partners are expected to support the process through technical expertise and financial assistance.
Koung said Liberia has the expertise, institutional capacity and national resolve needed to confront the challenge.
“The policy options have been identified. The reform priorities have been articulated. The responsibilities of stakeholders have been clarified. What remains is implementation,” he said.
The statement reflects the central challenge facing the new Task Force because the government has already acknowledged that the problem cannot be resolved through another round of discussions alone.
For businesses struggling to secure financing, the real measure of the reform will be whether banks become more willing and able to lend to productive enterprises.
For entrepreneurs, the test will be whether financing becomes more accessible and affordable.
For farmers and agricultural businesses, the outcome will be whether credit becomes available to expand production and strengthen value chains.
And for young Liberians seeking to build businesses, the measure will be whether the financial system creates more opportunities rather than presenting additional barriers to entry.
Koung said the ultimate success of the conference must therefore be judged by tangible outcomes, including the resolution of bad loans, increased lending to productive sectors, business growth, job creation and renewed confidence in Liberia’s banking system.
He warned stakeholders against allowing the conference’s recommendations to remain on paper.
“History will not judge this conference by the quality of the presentations delivered in this hall. History will judge it by the reforms implemented after we leave,” Koung said.
He reaffirmed President Boakai’s commitment to working with the Central Bank, Legislature, Judiciary, financial institutions, development partners and the private sector to ensure that the reform process continues beyond the conference.
“Our commitment is to implementation of the outcome, the recommendations and the commitments from all stakeholders. Our commitment is to reform. And our commitment is to delivering tangible benefits for the Liberian people,” he said.
Koung concluded by calling for decisive action to unlock access to finance, strengthen financial stability and expand economic opportunity.
The creation of the National Non-Performing Loans Task Force now gives the government a mechanism to pursue that objective. Its effectiveness, however, will depend on whether the promised coordination produces faster debt recovery, stronger lending practices and, most importantly, greater access to credit for the businesses and Liberians the financial system is expected to serve.
