Liberia: Central Bank Blamed for Economic Instability; Citizens Asked to Brace for Salary Delays

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According to the head of the Liberian Senate, the state of confusion brought about by the printing of approximately 10 billion Liberian Dollars by the CBL under the previous regime more than two years ago has created more economic uncertainty

MONROVIA – Senate Pro-Tempore Albert Chie (Grand Kru County) has criticized the Central Bank of Liberia (CBL) for not living up to expectation in providing macroeconomic stability and be a source of confidence in the banking sector of the country. 

According to the head of the Liberian Senate, the state of confusion brought about by the printing of approximately 10 billion Liberian Dollars by the CBL under the previous regime more than two years ago has created more economic uncertainty.

 “We appeal to our people for understanding in this matter. The next few months will be difficult with delayed salary payments continuing up to the Christmas season. However, the Government is working very hard to stabilize salary payments by the end of next February.”

“This special session of the Legislature is a catalyst for the achievement of this objective,” he said.

Making his opening remarks at the start of the Senate’s special session, the Pro-Temp also blamed the current economic situation in the country on the “many waves of protests” which he said has increased the political risk index and consequently affected foreign direct investment adversely.

“All of these factors have compounded to create an environment of hardship for our people,” he said.

“We are at a point where the Central Bank is seeking authorization from the legislature to print a total of L$35 billion, a new family of currency, to completely replace the current stock of banknotes. When the request was made in August this year, the CBL reported that the Liberian dollar supply in the economy stood at L$ 21.48 billion, with 86% in circulation outside the banks while cash in the CBL was at 8% and in the commercial banks 6% of the stock. From all indications in recent times, these proportions have changed over the last weeks as our citizens are unable to get Liberian dollars from commercial banks and Central Bank.”

– Albert Chie, Pro-Tempore, Liberian Senate

According to Sen. Chie, irrespective of all of these uncertainties, the government resolved to enter the IMF program which comes with its own “hard-to-swallow” prescription of wage harmonization – keeping the national wage bill at an affordable level and prudence in overall public sector spending.

“We are at a point where the Central Bank is seeking authorization from the legislature to print a total of L$35 billion, a new family of currency, to completely replace the current stock of banknotes. When the request was made in August this year, the CBL reported that the Liberian dollar supply in the economy stood at L$ 21.48 billion, with 86% in circulation outside the banks while cash in the CBL was at 8% and in the commercial banks 6% of the stock. From all indications in recent times, these proportions have changed over the last weeks as our citizens are unable to get Liberian dollars from commercial banks and Central Bank.”

Fall in revenue

Speaking to his fellow lawmakers, the Pro-Temp informed said that the Ministry of Finance and Development Planning has reported that the Liberian Revenue Authority has fallen short of its projected revenue collection from July to November 15, 2019 by approximately US$ 60 million.

The consequence of this significant shortfall in revenue collection, according to him, is manifested in delay in payment of salaries to public sector workers and the multiplier effect of a sluggish overall economy.

Sen. Chie cautioned his colleagues to consider actions which will help the economic recovery process, vis-à-vis completion of the authorization process for printing of a new family of currency, confirmation of the nominated Executive Governor and Deputy Governor of the CBL  who, when confirmed, will play a significant role in the management of the financial situation of the country and the ratification of key financial instruments which will help revive the economy.

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