Central Bank of Liberia Executive Governor Mills Jones says the CBL’s act of 1999, section 19.2, which states that the currency of the United States of America is legal tender in Liberia, is hampering the economy of Liberia.
Governor Jones asserted that the dual currency policy is making it difficult for the effective operation of the current monetary policy of the CBL, adding that the bank has control only over the supply of the Liberian dollars, but not the United States dollars, which is managed by the U.S. Federal Reserve, geared towards developing the US economy.
According to the CBL Governor, the high inflation on the Liberian market is the result of the US dollarization of the economic system here.
He noted that the 1999 currency duality act of the CBL did not take in consideration the usage of the Liberian dollar to restore its value as the US dollar is now causing a serious fundamental financial disequilibrium in the country.
Governor Jones said the Liberian dollar is very weak to circulate on the local market alongside the US dollar, which is stronger, adding that the dual currency policy is inappropriate to the effectuality, improvement and growth of the economic sector of Liberia.
“However, the CBL has been making policies to contribute to the Microeconomic stability, ensure great demand for the Liberian dollars, and strengthening and deepening the financial system of the Liberian society”, Jones assured.
He said the principal functionality of the CBL is not to only encash civil servants’ salary checks and maintain price stability, but to help in developing the country’s economic system.
He recounted that the CBL negotiated with the International Monetary Fund,(IMF) to waive Liberia’s huge debts, served on the government’s management team and other debt management committees to assist in improving the country.
Governor Jones disclosed that the country’s GDP is expected to rise to 5.9 percent, much higher than the projected growth of 5.5 percent of south Saharan Africa, due to enormous improvement swirling in the banking sector. He furthered that since 2011, the US exchange rate has been stable because of the CBL’s intervention into the market.
Addressing the Senate Committee on Banking and Currency during a public hearing over the weekend at the Capitol Building, the Governor said the CBL is working toward establishing a Liberian capital market to strengthen economy.
The hearing was in response to a recent request from the Committee on Banking and Currency for the CBL boss to provide updates on the banking sector of the country.