New L$500 bank note Should not become like Zimbabwe

WHEN PRESIDENT ELLEN Johnson Sirleaf announced to the nation months ago that ‘things would be tough’, little did many Liberians understand the implication. PRESIDENT SIRLEAF’S STATEMENT may have been in consonance with the down-scaling operations of some of the concession companies many thought were very viable to resurrect and stimulate country’s economic growth and development.

IT MAY HAVE begun with Acelor Mittal in Nimba and Grand Bassa Counties onto Putu Mining in Grand Gedeh County and later China Union in Bong County, as well as others; little did we still know it would have negatively impacted the nation’s socio-economic well-being. Drastic drop in the price of iron ore on the world market is the main factor.

EVEN WITH THE presence of some of the country’s best economists and financial experts from Harvard and other top world universities, the situation continues to worsen day by day. AND JUST RECENTLY, the management of the Firestone Plantation Company in Harbel, Margibi County decided to redundant five-hundreds of its employees.

“CONTINUED LOW NATURAL rubber prices, high overhead costs associated with the company’s concession agreement with the Government of Liberia, low production as a result of the inability to plant during the country’s 14-year civil wars, and the country’s uncertain business climate are the primary reasons for the continuing financial losses,” said the Firestone Management in an official statement issued last Thursday.

SINCE 2004, FIRESTONE Liberia said it has injected more than US$1 billion into the Liberian economy, through government taxes, salaries and pensions, local purchases and rubber purchases from local farmers, and has spent over US$75 million in providing free education, healthcare, housing and security.

AS A RESULT of the aforementioned factors, including the drawn-down of the United Nations Mission in Liberia, more Liberian dollars have been and continue to chase a few US Dollars at an inflated rate.

AGAIN, WITH THE introduction of a new fine hundred dollar bank note by the Government of Liberia, through the Central Bank of Liberia, the country’s economic problem may just be exacerbated, especially when the nation may have nothing productive to back such circulation, in terms of exports.

ACCORDING TO THE CBL, its decision is in keeping with its statutory mandate to at all times ensure that the integrity of the Liberian Dollar is uncompromisingly maintained. BUT VETERAN ECONOMIST Samuel P. Jackson, in his view expressed in a Face Book social media post recently following the announcement on July 27, 2016, by Governor Milton Weeks of the CBL that the new bank note would be introduced, said the decision would solve the issue of portability with the issuance of 500 LD notes, but not divisibility, indicating “More importantly, the note signals the devaluation of our Liberian currency and portends hardship due to the lack of productivity in the economy.”

ACCORDING TO JACKSON, currency has to be portable and divisible, and even though he had no problem with the printing of a higher denomination note to accomplish portability, the issue of change coins that will use decimal instead of rounding to the nearest note of 5 dollars, which is now around five US cents, may just be the problem, saying the printing of the higher denomination note also denotes depreciation of our currency.

IF AND ONLY if such major economic decision by the bank is in keeping with national interest and sincerity, Liberians would have preferred the change coins to a new five hundred dollar bill.

WE CAN ONLY hope that the decision is actually in the interest of economic stability, other than political and selfish motives.

ON A SERIOUS and ending note, if it is the wrong intervention, we may just be heading towards the unfortunate economic situation with which Zimbabwe is currently faced.