Solution to Liberia Economy Problem

There is an economy problem in Liberia at this time from shortage of money to high high ship. Some link https://frontpageafricaonline.com/front-slider/central-bank-of-liberia-says-it-needed-to-have-printed-l7-5bn-to-meet-demand-for-liberian-dollars/:  Central Bank of Liberia Says It Needed to Have Printed L$7.5bn to Meet Demand for Liberian Dollars By Gerald C. Koinyeneh Last updated Dec 24, 2020  0  Share Monrovia – The Central Bank of Liberia (CBL) has attributed the shortage of Liberian and United States dollar banknotes on the Liberian market to the reluctance of the Legislature to grant its request of printing the amount of L$7.5 billion and the COVID-19 pandemic that is ravaging the world. The CBL statement comes in the wake of a warning from the United States Embassy in Monrovia to its citizens and permanent residents visiting Liberia of the difficulties in getting cash in the country. The Embassy, in an alert to would-be travelers, noted that the banking sector in the country has been experiencing cash shortage over the last several months. It also noted that ATM machines often do not dispense money. “As a consequence, it is difficult to obtain adequate cash supplies from ATMs and banks.  There are no ATM facilities for public use at the U.S. Embassy,” the Embassy stated. As per regulation, travelers would have to declare cash amount of US$10,000 and above upon arrival in Liberia. Passenger may, however, be allowed to enter with US$7,500 or less. In a statement release on Tuesday, the CBL acknowledged that that it is aware of the shortage of money in the banking system, particularly the limited supply of Liberian dollars, noting that it is unusual and can be attributed to the increased demand for Liberian dollars overtime, which has been exacerbated by COVID-19.   “The Central Bank of Liberia (CBL) is fully aware of the current liquidity pressure in the banking system, particularly the limited supply of Liberian dollars. It is, however, worth noting that the pressure on the Liberian dollar this year is unusual and can be attributed to the increased demand for Liberian dollars overtime, which has been exacerbated by COVID-19,” the CBL said it the statement. It continues: “In its effort to preempt this seasonal pressure, the CBL in 2019 forecast L$7.5 billion based on its analysis but was authorized to print only L$4.0 billion. This amount which was brought into the country in July this year, was inadequate to replace the current amount of mutilated banknotes and at the same meet the liquidity demand in the banking system. In spite of this constraint, the CBL has been strategically infusing the L$4.0 billion through the commercial banks with substantial amount already infused into circulation.” As additional measure, the CBL revealed that it has been working with all key stakeholders, both in the private and public sectors, to mitigate the high demand of money, adding that the Bank is currently engaged with commercial banks and mobile money operators (MNOs) to promote the use of mobile money and other electronic forms of payment in addition to withdrawal of cash. “The CBL wants to re-assure the public that it is doing everything necessary to ensure the availability of both US and Liberian dollar liquidity for the festive season. The Bank has also put into place a Liquidity Monitoring Framework, including the establishment of an Internal Liquidity Management Team to respond to the prevailing liquidity challenge.” However, the CBL said in order for it to be able to exercise full monetary authority, it will need full autonomy over the printing of currency like most other central banks across the world. It noted that the recent amendment of the CBL Act to give a three-year latitude to the Bank to print without frequent Legislative approvals is a positive step in the right direction. ‘Missing L$16 Billion’ Saga Impacts Legislature’s Reluctance to Approve RELATED POSTS Liberia: “Ivory Coast, Guinea or Ghana not Using Our Money,… Dec 23, 2020 Liberia: Communities Use New App to Track Illegal Logging Dec 23, 2020 Liberia: NaFAA Begins Final 2020 Fishery Fees Collection… Dec 23, 2020 For sometimes now, the George Weah’s administration and the CBL have been seeking Legislative approval to print additional banknotes to address the problem of money shortage in the banking sector. The CBL in 2019 forecast L$7.5 to be printed based on its analysis but was authorized by the Legislature to print only L$4 billion. The Bank protested that the money was inadequate to replace the current amount of mutilated banknotes and at the same time meet the liquidity demand in the banking system, but the lawmakers, who have been hugely blamed for allowing the CBL under the Governorship of Milton Weeks to print L$16 billion that that did not have any significant impact on the Liberian economy amid report that the money went missing, were not willing to authorize such huge amount. Since then, several communications from the President and efforts by the CBL to get additional money printed have been futile. In 2019, a recommendation by the Senate Committee on Banking and Currency chaired by Senator Marshall Dennis (Grand Gedeh), urging the Senate plenary to authorize the printing of Liberian dollars banknotes in several denominations and minting of coins was quashed following staunch opposition from several Senators including Oscar Cooper (IND., Margibi), Darius Dillon (CPP, Montserrado) Varney Sherman (UP) and Peter Coleman (CDC). In its seven-count recommendations, the Committee requested that the plenary of the Senate authorizes the printing of new banknotes to “completely replace the ones on the market; that the banknotes should be printed in a high grade and carries more and sophisticated security features to prevent counterfeiting, and the likes; that the CBL confines itself to the proposition document submitted to the Legislature for the printing of the currency, especially the mode of exchange enshrined in the document, as well as other monetary policies designed to avoid missteps and mistakes in the past.” The Dennis-chaired committee further recommended that the CBL put stringent policies and control measures in place to prevent hoarding, and other forms of economic sabotage; that the Senate deals with the CBL proposal to print the total amount of L$35 billion in various denominations including L$20, L$50, L$100, L$500, L$1000; as well as and coins be minted in the denominations of L$1, L$5, and L$10 as proposed by the CBL. Immediately after the reading, Margibi County Senator Oscar Cooper, sharply reacted to the Committee’s report, questioning why the CBL should request to print L$35 billion, when the money in circulation is L$21 billion that needs to be removed from the market. “What becomes of the difference of L$14 billion, which was not properly answered by the Bank Governor,” he queried. “After the L$16 billion saga with the Liberian people, this money will fall on them if not managed properly. We as committee members did not have due diligence to debate this within committee. If this Senate votes to approve this L$35 billion, we will put the Liberian people in serious, serious financial jeopardy, because many financial and economic questions have gone unanswered.” Senator Darius Dillon added: “Whatever we are doing now must be done with due diligence so that posterity can be kind to us. So colleagues, please let the Committee take this report back, and bring it to us after our return in January.” The Chairman of the Senate Committee on Judiciary, Senator Varney Sherman (UP, Grand Cape Mount County), out rightly said he will vote against the printing of L$1,000 bank notes and the minting of coins. Senator Sherman accused members of the Committee of “some fundamental issues it did not consider, such as the suggestion to the production of coins, which he said that the cost for producing coin is more than the value of the coin.” “I will vote against L$1000 banknotes and coins. How do we have control if we allow them to keep L$35 billion in their vault? I am afraid that the Liberian people will not judge us well when they look at our immediate past history, as to how we managed L$10 billion, and then we tell them that we want to print L$35 billion,” Senator Sherman warned. Although the CBL said in spite of the constraint, it has been strategically infusing the L$4 billion through the commercial banks with substantial amount already infused into circulation, the strategy seems not to be yielding fruitful results as Liberians are finding difficult to access cash at various commercial banks or are often served mutilated bank notes.