The uncontrollable inflating rate at which the Liberian Dollar is trading with the United States Dollars continues to be of serious concern to many. At present, the Liberian Dollar was trading around L$97 to US$1 and the devaluation may continue to increase as prices of goods and services continue to be at the will and pleasure of the business community.
But Central Bank Governor Milton Weeks, during last Thursday MICAT press briefing, attributed the alarming and unfortunate economic situation to a number of factors. According to Governor Weeks, the high demand for foreign exchange, the drawdown of the United Nations Mission in Liberia, as well as fall in prices of Liberia’s primary commodities – iron ore and rubber, on the global market, thus affecting revenue generation, as more Liberian dollars chase a few U.S dollars on the market, among others, are factors responsible for the current economic situation.
It is agreeable facts the aforementioned as per the governor’s statement last week are the attributing factors of the depreciation of the Liberian currency. Even though the CBL Governor did not mention former Governor Mills Jones’ loan scheme and monthly transfer of millions of U.S dollars by Liberian public officials, he also expressed the hope that over the medium term – 2017 to 2021, the Liberian economy is expected to recover with a projected average growth of 5.8 percent, 2.0 percentage points lower than pre-EVD outbreak level of growth, also noting that the success of the medium-term growth will be driven by the agriculture, forestry, manufacturing and service sectors.
According to the governor, to mitigate the current levels of Liberian dollars depreciation for the first half of 2016, he added that the CBL intervened in the Foreign Exchange (FX) market with the amounts of US$14.5 million (US$5 million in June alone), US$5 million lower than the level of intervention made in the same period 2015, saying the bank lowered intervention largely due to policy on reserves accretion.
He also clarified that the depreciation of the Liberian dollar was due to the printing and infusion into the market of additional currency notes, saying: “This assertion is simply not true. The CBL wishes to emphatically say that no additional currency has been released into the system. The imminent release of the new bank notes will be aimed primarily at replacing worn and mutilated notes.”
As per the commitment and hope expressed by the Governor, let’s give him the opportunity to do all he can, in whatever collaboration that may necessary, to restore hope to the Liberian economy and avoid being un-necessarily critical too soon.
From all indications, the Management of the Central Bank may have the will-power, but the partnership – in the banking sector and public sector, required to drive such holistic restoration efforts must be fostered to accelerate the process.
This means, the highest degree of commitment and sincerity on the part of all stakeholders must be employed in such efforts. All-in-all, the Executive Governor and Management of the Central Bank mean well and we must all allow them the opportunity towards the appreciation of our currency.