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.
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.