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The shortage of Liberian Dollars

A CENTRAL BANK regulation here seems to be strangulating commercial banks and  denying customers the opportunity to withdraw the amount of Liberian Dollars they  want from the banks due to shortage of local currency.

THE CENTRAL BANK of Liberia has been mopping excess liquidity in circulation, in an  attempt to strength the Liberian Dollar with the official exchange rate in the forex  market currently at 152 LRD for US$1.00.

AMONG SEVERAL AUSTERITY measures instituted by President George Weah’s Economic  Management Team include infusion of US$25 Million to mop out excess Liberian  Banknotes in the market.

DUE TO THE exercise, employees at some government ministries going at commercial  banks to receive monthly salaries, were being restricted to withdraw specific amount  of money even at their inconvenience.

THE SHORTAGE OF Liberian Banknotes is even exacerbated by another instruction to  commercial banks not to issue the old banknote (printed under the administration of  former President Charles Taylor) to the public.

INSTEAD, BANKS ARE mandated to issue only banknotes that were printed by the  administration of former President Ellen Johnson Sirleaf. Printed in the People’s  Republic of China, the actual amount of new money brought into the country by the  former administration is shrouded in secrecy with various accounts.

THE ECONOMY SEEMS to be slipping to recession much faster than had been imagined  amid soaring prices.

THE QUAGMIRE HAS prompted Nimba County District #6 Representative Dorwohn T. Gleekia to call on the House to invite the Executive Governor of the Central Bank of Liberia  Nathaniel Patray to explain reasons for the alleged limited disbursement of Liberian  Dollars to commercial banks.

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WE THINK WHILE there may be good intentions by monetary authorities at the CBL to  salvage the economy from total collapse, care should be taken or else, policies  could boomerang with adverse unintended consequences.

Winding the entire economy down in the short-run may not be the most prudent way to  proceed, especially, when there are two competing local currencies, and abruptly  withdrawing one from circulation could lead to vulnerability as the case seems to be  presently.

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