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Open Letter to Minister of Finance

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“Disappointingly, our Mount Coffee Hydro, extensively looted of its equipment, is sinking or has sunk into the great beyond”.

Bai M. Gbala,Sr.
Kakata Highway
P. O. Box 1460
Paynesville/Monrovia 10 – Liberia
Telephone: (+231-880)954-428
E-mail: bai_gbala@yahoo.com/baimaysongbala@yahoo.com

 

November 25, 2013

The Honorable Amara Konneh
Minister of Finance & Economic Planning
Republic of Liberia
Monrovia

Sir:

I write in response to the macroeconomic policy measures – “to enhance the economy, improve the value of the Liberian dollar and stabilize the exchange rate” – that you announced (New Democrat, November 21, 2013).

Herewith attached is the article (“Now That We Printed New Liberian Banknotes”, June 2001), written from the “comfort” of Cell #1 of the Political Cellblock of the Monrovia Central Prison in 2001, in reaction to the printing of new, Liberian banknotes, the Liberty banknotes. 

In that article, I observed the-then prevailing, general, economic conditions, with relevant remarks; raised questions regarding some macroeconomic policy decisions and actions taken, and suggested short-to-mid-term, policy measures. Many of those conditions about which I wrote have been addressed and resolved, while others, very important macroeconomic conditions and relevant, policy measures, in my view, remain, painfully constant. There is no doubt, absolutely, that the National Economic Planning Ministry is informed and guided by the fact of economic reality and that an exchange regime – whether floating, fixed or managed – is the outcome of the interaction of the market forces of supply and demand.

For your information, the Ministry’s consideration and possible action, I re- submit these continuing, negative, adverse conditions: 

1. The continuing, excessive demand for imported goods and services bought with foreign currencies and sold on the local market at prices denominated, also, in foreign currencies. As you know, this excessive demand for imported goods and services is, in fact, excessive demand for foreign currencies; therefore, the “price”, of the given, foreign currency, expressed in the Liberian dollar, rises excessively, with disastrous, economic impact.

2. Also, that the continuing level of imported goods and services bought with foreign currencies be controlled and reduced through import tariff levies. Commodities such as soft drinks, beer, stout, plastic containers, bottled, drinking water (produced in the country) and tobacco products (proved to be injurious to health), other expensive alcoholic beverages (also known to be injurious to health) and expensive, luxury automobiles, jewelry, etc., should be subject to tariff manipulation to discourage import of these commodities. The control and, therefore, reduction of the level of import of the described goods and services will also yield the following, economic benefits:

a) Reduce the pressure on the nation’s meager, foreign exchange reserves, with priority attention placed on the import of “essential commodities” such as pharmaceuticals, petroleum products, educational materials and supplies.

b) The measures will also reduce and eventually eliminate fierce competition on the Liberian market between products “made-in-Liberia” and imported commodities often subsidized by foreign, home governments. Ignored, this competition is highly likely to force the Liberian products out of the market and, eventually, drive the Liberian producers out of business, resulting to unemployment.

c) Importantly, the application of the foregoing measures will reduce, significantly, the excessive demand for foreign currency to purchase unnecessary imported goods and services. It is, as you know, this excessive demand for foreign currency that drives up the foreign exchange rate which, in turn, drives up commodity prices and, thus, causes the general price inflation. This economic spiral bears the major responsibility for the economic hardships that affect all Liberian, salary/wage earners and related consumers.

d) The continuing, inflationary pricing and sale of goods and services in foreign currency within the territory of the Republic. Examples are used and new automobiles, electric power generators, electric current, ice boxes, freezers, mobile and landline telephone equipment, taxes, rent and lease payments, real estate (including land) pricing, the list goes on and on.  Salaries/wages are paid in Liberian currency, but Liberians are required, unreasonably, to purchase goods and services with prices denominated in foreign currency.

e) In this connection, I wish to invite the National Economic Planners’ attention to serious, economic matters/issues affecting the nation:

1. The continuing absence of Transportation/communications – efficient/effective, safe and all-weather roads/highways throughout our relatively small and sparsely-populated nation, although we have been around for more than century and a half, have had all that it would have taken and, now, have all that it will take to achieve this crucial objective of national economic development.

2. The multiplicity and rise of the “pehn-pehn”, motorcycle-taxis with the problem of traffic control, safety, congestion and importantly, in economic terms, the importation/sale of which, again, is in foreign currency, an adverse, macroeconomic condition.

3. And finally, this one: the popularity and rise of the electric, power generator. The generator has effectively replaced our Mount Coffee Hydro and the Liberia Electricity Corporation (LEC), much as the plastic water tanks have replaced the Liberia Water & Sewer Corporation (LWSC). This phenomena is not only a planning liability, but also an economic demand.

In the article (“Ay Be Libela-This is Liberia”, November 29, 2011), I observed that “There are some 100-, 200-, 300- and 400-KVA, electric generators – gasoline or diesel – that supply electricity for 10-12-24 hours per day to the ministries and agencies of government.

Furthermore, foreign-owned and operated hotels, restaurants, business-houses, residences, diplomatic missions and those of us (Liberians who can afford it buy in foreign currency) and install electric generators to provide private, electric power, with overhead, plastic water tanks from which water is pumped by electric power.”

“Meanwhile, the majority of city dwellers nation-wide, live in darkness or by kerosene or candle light (a potential and often fire hazard) without pipe-borne, safe, drinking water. Some residents, who, in relative terms, can afford the expense, buy electric power from foreigners and enterprising, Liberian entrepreneurs who, very often, lack the capital, management experience and relevant, professional competence for efficiency and safety”.

“Is it not, according to elementary principles of economics, effective and efficient, optimal use of scarce resources at the least, possible cost, to combine all of the mosaic of disjointed, inefficient, and costly service into a single, manageable, cost-effective scheme for service to the general public?”

“Disappointingly, our Mount Coffee Hydro, extensively looted of its equipment, is sinking or has sunk into the great beyond”.

“It is important to note that there are two major reasons for this state of economic affairs in our country. The first is the historical, emotional attachment to and unreasonable preference of the US greenbacks by Liberia’s elite, a social, economic and political class that constitutes the sole decision-making body in our society”.

The validated facts of Liberian history show, conclusively, that the nation’s political economy had been controlled and dominated by high officials of government with socio-cultural attachment to the USA and who, mostly, were dual citizens. That condition continues today in many subtle forms or the other, and is likely to be exacerbated by the on-going outcry for return, this time, to legalized dual citizenship, but the adverse economic condition will remain.

“The second is due to the first – socio-cultural, emotional attachment to the USA, a foreign country, and preference of its Greenbacks – which gave and gives rise to our inability to organize and establish enterprises/organizations for the production and export of goods and services desired and demanded by foreign countries and consumers – USA, UK, France, Germany, etc”. 

“However, Until and unless we establish the enabling infrastructure to produce such goods and services, the Americans, British, French, Germans, etc., will NOT open up the vaults of their central banks and dish out to us, free of charge, millions or billions of greenbacks, pounds, francs or marks, historical/emotional attachment and reasonable preference notwithstanding. We will have to earn their currency through trade, commerce and investment”.

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