By By: Staff Writer
Monrovia, Liberia — In a decisive convergence of legal expertise and executive will, the Government of Liberia has announced the establishment of a National Non-Performing Loans (NPL) Task Force, signaling a swift embrace of the Law Reform Commission’s call for urgent, integrated reform of the country’s fragmented NPL resolution framework.
The announcement, made by Vice President Jeremiah Kpan Koung, Sr. at the closing of the three-day National Conference on the Resolution of Non-Performing Loans in the Liberian Financial Sector, held in Monrovia, came just days after the Law Reform Commission’s Chairperson and Chief Executive Officer, Cllr. Bornor M. Varmah, warned that Liberia’s existing laws — though substantial — “do not yet form a seamless NPL-resolution architecture.”
A Legal Diagnosis That Demanded Action
In his address titled “Legal and Regulatory Framework for Resolving Non-Performing Loans in Liberia,” Cllr. Varmah posed a fundamental question that framed the entire conference: “Does Liberia have an adequate legal framework to resolve today’s Non-Performing Loans, or must we reform the law to make recovery faster, cheaper and more predictable?”
His answer was unequivocal. While Liberia possesses critical statutory building blocks — including the Commercial Code, the Insolvency and Restructuring Act of 2016, the Commercial Court framework, the Bank-Financial Institutions and Bank Financial Holding Companies Act (BFIA), and the CBL’s prudential regulations — the framework remains insufficiently integrated and operational.
“The issue is not that Liberia has no laws,” Varmah stressed. “The issue is that the laws do not yet form a seamless NPL-resolution architecture.”
He identified five priority areas requiring urgent attention: the Insolvency and Restructuring Act’s lack of secondary rules to make restructuring a genuine alternative to liquidation; enforcement gaps in the Commercial Code’s secured transactions provisions, particularly for movable collateral; lengthy and unpredictable mortgage and real-property enforcement procedures; the need for specialized NPL procedures and expedited debt claims in the Commercial Court; and the banking-resolution framework under the BFIA, which requires operational regulations, guidelines, and a Resolution Manual that have yet to be fully adopted.
Varmah drew a sharp distinction between rules already being enforced — such as full provisioning of NPLs after one year and the 10-percent NPL threshold — and those still outstanding, particularly bank resolution. Quoting IMF reports, he noted that the CBL has been developing bank-resolution regulations, operational guidelines, a Resolution Manual, and a formal remedial and corrective-action framework for weak banks.
“The key question is no longer simply, ‘Have we drafted the regulations?’” he said. “The question is: ‘Have they been formally adopted, published and made operational?’ If not, what is holding them?”
The Three-Track Reform Agenda
To address these gaps, the Law Reform Commission proposed a three-track legal reform agenda:
Track One calls for immediate administrative action to complete and operationalize all regulations already authorized under existing law — covering bank resolution, corrective action, NPL classification and provisioning, collateral enforcement, restructuring and workout procedures, and supervisory enforcement — without waiting for legislative intervention.
Track Two involves targeted legislative amendments through a clause-by-clause audit of the Insolvency and Restructuring Act, the Commercial Code, mortgage and foreclosure provisions, the Commercial Court framework, and the BFIA, to identify provisions that delay recovery, create conflicting procedures, or leave gaps between secured enforcement and insolvency.
Track Three envisions a unified NPL resolution architecture in which default, restructuring, enforcement, insolvency, collateral realization, distribution, and closure operate as one coherent legal process rather than separate legal islands.
“We do not need to begin from zero,” Varmah affirmed. “Liberia has the statutory building blocks. What we need now is legal integration, institutional coordination and implementation.”
He distilled the reform objective into two simple principles: “A loan should not become a permanent legal dispute merely because it has become a non-performing asset,” and “Collateral should represent realizable value, not merely value written on a bank’s balance sheet.”
Government’s Swift Response
Vice President Koung’s announcement of the National NPL Task Force — established on the directive of President Joseph Nyuma Boakai — directly mirrors the Commission’s call for institutional coordination and operational urgency.
The Task Force will bring together the Central Bank of Liberia, the Ministry of Finance and Development Planning, the Ministry of Justice, financial institutions, relevant government agencies, development partners, technical experts, and other key stakeholders. According to the Vice President, it will provide a coordinated national framework for addressing non-performing loans, strengthening the resilience of Liberia’s financial sector, promoting responsible lending and credit growth, and restoring confidence in the banking system.
“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 declared.
He said the President has directed relevant institutions to move expeditiously to finalize the composition, terms of reference, and implementation action plan of the Task Force, with clear responsibilities, timelines, and mechanisms for monitoring and reporting progress.
“The policy options have been identified. The reform priorities have been articulated. The responsibilities of stakeholders have been clarified. What remains is implementation,” Koung emphasized.
From Recommendations to Reforms
The Vice President’s remarks reflected a clear alignment with the Law Reform Commission’s three-track approach. He noted that the government supports measures to strengthen prudential supervision, credit-risk management, and Liberia’s credit infrastructure, as well as reforms aimed at improving debt recovery, insolvency administration, collateral enforcement, and commercial dispute resolution.
He also stressed that reforms must promote credit discipline while ensuring fairness, transparency, and consumer protection — echoing Varmah’s insistence that NPL reform must be “fair to both creditors and debtors.”
Crucially, Koung acknowledged that implementation cannot be left to one institution alone. Government agencies must strengthen policies and coordination, while the Legislature must support necessary legal reforms and the Judiciary must play its role in strengthening contract enforcement and commercial justice. Financial institutions must improve governance, underwriting standards, and risk-management practices, while borrowers must honor their financial obligations.
“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.
A Defining Moment for Liberia’s Credit Culture
The convergence of the Law Reform Commission’s technical diagnosis and the Executive’s political commitment has created what participants described as a rare window of opportunity. The Commission has committed to working with the CBL, the Judiciary, the Ministry of Finance, the Liberia Bankers Association, and development partners to undertake a targeted NPL Legal Reform Audit and produce specific amendments and regulations.
“The Law Reform Commission is ready to be part of that reform,” Varmah declared.
As the conference closed, participants broadly endorsed both the Commission’s proposals and the government’s Task Force initiative, emphasizing the need for sustained collaboration. The deliberations are expected to inform concrete legislative and regulatory actions in the coming months.
The success of NPL reform, Varmah argued, will be measured not by how many loans are written off, but by how quickly and fairly Liberia can restore value, enforce legitimate claims, rehabilitate viable businesses, and return capital to productive use.
With the National Task Force now set to operationalize the conference’s outcomes, Liberia appears poised to move from legal diagnosis to coordinated implementation — a shift that could shape the future of the country’s credit culture, financial stability, and economic recovery for years to come.
“Together, let us unlock access to finance, strengthen financial stability, expand economic opportunity, and build a more prosperous Liberia for generations to come,” Vice President Koung urged.
The National Conference on the Resolution of Non-Performing Loans in the Liberian Financial Sector was convened by the Central Bank of Liberia in collaboration with the World Bank and The Liberia Bankers Association and concluded on Friday, September 11, 2026, in EJS Ministerial Complex in Congo Town.
