Amidst serious economic pinch here and rapid depreciation of the Liberian Dollar against the United States, the Liberian Senate has begun debating whether or not, the country should continue using both currencies in the economy or maintain only the Liberian Dollar.
The Senate through its Banking and Currency Committee headed by Grand Gedeh County Senator A. Marshall Dennis has submitted a report, indicating some reasons for the high speed depreciation of the Liberian Dollars against the United States Dollars.
Due to the seriousness attached to the report, the Senate plenary during its Thursday’s sitting in Chambers, voted overwhelmingly to summon the Executive Governor of the Central Bank of Liberia, Milton Weeks, and the Minister of Finance and Development Planning Boima Kamara, to appear next week to provide expert opinions on the way forward in strengthening the local currency.
The committee had held a closed door meeting last week with the Deputy Governor of the CBL Charles Sirleaf, who pointed to structural and external factors, including excess demand for foreign exchange for import payments, growing government expenditure in Liberia dollars, coupled with global commodity price slump as well as effects of UNMIL’s drawdown on the economy and uncertainty deriving from the October 2017 Presidential and Representatives elections as forces that are speedily depreciating the local currency against the United States Dollars.
Mr. Sirleaf said the Central Bank is arranging to secure more U.S. dollars and up from previous 3.25 million to about five million in order to purchase more Liberian dollars and infuse them into the market to stabilize the exchange rate and temporarily solve the liquidity problem.
Governor Sirleaf blames the depreciation of the Liberian dollars partly on the dollarization of the economy, and wishes that the government would see the need to de-dollarize the economy to avoid unnecessary artificial shortage of the local currency in the market.
The committee said drawing from past and present experiences, and in order to sustain a stable economic growth, the government will have to do strategic economic planning by engaging and promoting economic diversification.
The nation’s dependence on enclave sector-led economic growth, anchored on export of largely irreplaceable commodities can create or result to panic and internal economic volatility by the slightest disturbance of an international economic stimulus, it noted.
It then recommends that the single currency regime in the country be reviewed by the Senate’s plenary and passed into law to mitigate depreciation in the value of the Liberian dollars, stressing that Liberia is the only country in the region, if not the entire continent of Africa that has dual currencies regime with the worse economic status on the globe.
The committee is also recommending the CBL provide a comprehensive briefing on the amount of Liberian dollars currently in circulation outside the banking system and devise a means by which hoarders will be compelled to return that amount into the bank for proper accountability.
It then proffered that the CBL presents a comprehensive audited financial statement with all notes attached to prepare plenary in taking teps necessary to improve the economic situation especially, the increase in the exchange rate between the Liberian dollar and the United States dollars.
As part of several austerity measures being initiative here, the government has announced plan to halve salaries for senior officials, including members of the cabinet in both currencies due to scarcity of the U.S. Dollars in the market.
By E. J. Nathaniel Daygbor