Liberia: Former Finance Minister Urges Upholding CBL’s Independence, Integrity

Former Finance Minister Augustine Kphe Ngafuan is urging the upholding of the independence and integrity of the Central Bank of Liberia

Monrovia – Former Finance Minister Augustine Kpehe Ngafuan has called for the upholding of the independence and integrity of the Central Bank of Liberia (CBL) as one way to tackle the challenges or mitigate the impact on the country’s economy.

The former Finance Minister’s informed suggestion follows those of many scholars, including economists and financial experts, who have proffered ways by which they think will get the Liberian economy up and running smoothly. Save Min. Ngafuan, nearly all of those, proffering ways, have not had the privilege of sitting in some of the hot seats of the nation’s financial institutions.

Mr. Ngafuan has served as Director of the Bureau of Budget, before it was merged with the Ministry of Finance. He has again served as a Minister of Finance. He has even held a senior managerial post at the Central Bank of Liberia. During all of those periods, the country’s economy was far better than it is today.

Speaking on “Ensuring Macroeconomic Stability and Sustained Growth: A Critical Pathway to National Reconciliation and Social Inclusion in Liberia” at a two-day “Dialogue on National Reconciliation and Social Cohesion in Liberia”, Min. Ngafuan, who also served as Foreign Minister, admitted that while there is no silver bullet to solve the many challenges the economy faces, he maintains that the bank’s independence and integrity help to fix the problems.

His urge for the CBL’s independence was contained in his recommendations to the audience and organizers of the two-day dialogue on national reconciliation.

“Central Bank’s main mandate is to maintain price stability and craft appropriate policies and measures to ensure that the financial system as a whole is sound and that other macroeconomic aggregates such as inflation, exchange rates, interest rates, etc. do not cause serious macroeconomic instability and imbalance

“Spiraling inflation rapid exchange rate depreciation disproportionately affect the poor, many of whom earn Liberian-dollar denominated salaries or trade largely in Liberian dollars and therefore suffer material reductions in their purchasing power when inflation sky-rockets and the value of the Liberian dollar plummets.”

He further stated that crafting of monetary policies, which is done by the Bank, should be influenced strictly by the interest of the country and not the interest of a political party or a politician.

According to him, the rationale for giving the Executive Governor and the Governors on the Board of the Central Bank tenure in the Central Bank Act of 1999 is to bolster their independence so that they do not bend to the whims and caprices of the power that be or personally dabble into national politics. He added: “Governors of the Central Bank of Liberia are like judges of the Supreme Court. The decision they make could make the poor to become rich or could cause the poor to become poorer.”

While the former Foreign Min. praised former President Charles Taylor for ensuring the passage of appropriate legislations to improve the soundness of the financial system and to provide for the establishment of an independent Central Bank to replace the erstwhile National Bank, he commended President George Weah for his recent State of the Nation Address, in which he committed his Government to measures aimed at upholding the integrity and independence of the Bank. He added: “Hope that the Weah-led Government can muster the fortitude to stay this course.”

 On the fiscal front, the former Budget Director recommended improving the capacity of budget system to contribute to macroeconomic stability and sustained growth

“Next to the Constitution and the statutes, the budget is the most important document in the land. The budget is where we walk our talk. If we want to know whether a policy pronouncement or commitment from the Government is mere bombast or not, we should check the budget. The budget shows in practical terms the direction of a nation during the course of the budget period,” he stated.  

He warned that failure to plan or budget properly leads to many disruptive budgetary transfers from approved expenditure lines to accommodate unbudgeted expenditure items often dubbed as “emergency”. “In some cases, shortfalls in revenue collections also lead to Government’s inability to disburse approved expenditure items,” he added.