Liberia's Finance Minister, Augustine Ngafuan, told the BBC's Network Africa that debt servicing took up large amounts of its national budget.

At the end of June 2007, the country's external debt was about $4.4bn.

Asked whether the cancellation of debt would simply mean Liberia would start borrowing more money again, Mr Ngafuan said: "Since 2006, our government has not borrowed a dime from any country.

"In fact, we ran what is called a cash-based balance budget, meaning that Liberia lives within its means."

On cancelling the debt, the Paris Club said it welcomed "Liberia's determination to continue to implement a comprehensive poverty reduction strategy and an ambitious economic programme providing the basis for sustainable economic growth".