Central Bank of Liberia Board Member-designate Describes US$25m Mop-up Exercise as “Tactical Error”
Monrovia – Mr. James Dennis, a Central Bank of Liberia Board member-designate has described as a “tactical error,” the decision by the Technical Economic Management Team (TEMT) to have left commercial banks out of the Mop Up process. TEMT is headed by Finance Minister Samuel Tweah. He is on record of saying that they did it a “different way.” This different way included allegedly taking thousands of US$s and giving it to foreign exchangers sitting in little booths in street corners without proper supervisions.
According to Mr. Dennis, TEMT should have used commercial banks to carry out the mop-up, which according to him, would have been the only effective way of achieving the aim of the exercise.
“With respect to the Mop-up exercise, it should have been done through the commercial banks. There is no other effective way to do it except through the commercial banks. Having direct relationship with the public was a tactical error.
“The CBL doesn’t have the resources to control the rate; the rate is controlled by market forces. There must be available foreign exchange to provide for the economy to impact the rate downward. The tool there is the auction. Auction is done through the commercial banks and you can then ensure that the essential commodities importation benefit from the use of the country foreign exchange.”
Speaking at his confirmation hearings conducted by the Senate’s Committee on Banking and Currency Wednesday, July 3, Dennis claimed that Liberia’s foreign exchange pool is limited and leaders in that sector need to start to look for options that would “expand the pile,” which he believes can be done through foreign exchange surrender — paying greater portion of remittances in Liberian dollars.
“If confirmed we will look at all the options,” he promised.
The CBL board member-designate criticized the loan program applied by former CBL Executive Governor J. Mills Jones. Former Governor Jones initiated a program where loans were given to the public directly without the use of commercial banks.
“The direct loaning of funds to the public was also wrong; it should have been done through the banks that would handle the disbursement and management to ensure that the proper things are done. That’s why we have all the money sitting out there and not being able to be collected; new things need to be done.”
Mr. Richard A. Dolley, another Board member-designate, in response to Maryland County’s Senator Gbleh-Bo Brown’s concerns about internal controls, said, there are policies in place at the CBL but people have refused to apply them.
“Internal control policy can be in place but if we choose to ignore them then they are not there. For example on the case of the US$25 million, how to handle it, obviously there were no clearly defined policy or procedure so no internal controls were designed for it,” Dolley stated.
He promised that if confirmed by the Senate, part of their priorities will be to look at every audit report and will work to redesign a strategy. “We will look at these audit reports and see how we can redesign a strategic plan for the CBL. CBL is a policy-oriented institution. It’s not a factory. The policies are there but people knowingly or unknowingly ignore them.
“If the people in charge are not implementing the measures put in place, you will not see the impact. If confirmed, it is my hope that we change the behavior by redeploying people who are not trained in order to deploy people who are trained.”
Independence of the Central Banks
On the issue of independence, he said central banks around the world carry operational autonomy and that is why it should be apolitical but it also plays a major role in the economy because they work along with the fiscal authority complimentarily. “We will follow best practices. I feel that the CBL’s independence should be maintained but we can do that working with other entities.”
For his part, Mr. Timothy Thomas, another board of governor member-designate, said the CBL cannot surrender its authorities and independence to other agencies of government. He insinuated that that seems to be the case over the years especially on the Mop-up exercise. “There seems to have been an overstretched of this complementary relationship where the CBL was losing its oversight and I think we need to stand strong as a board when it comes to upholding the independence of the CBL.”
Mr. Musa Dukuly, the CBL Acting Deputy Governor for Economic Affairs-designate, promised to endeavor to strengthen collaboration with the fiscal side to ensure that the operations of the CBL are not interfered with significantly.
“We must understand that the CBL has two kinds of independence; the key problem is the operational independence and goal independence. The operational independence is what we believe that has been interfered with significantly. Technically, you cannot have a 100 percent CBL independence.”