By: Varney Dukuly
MONROVIA: Citizens and foreign residents could sense relief when the country enjoyed, for months, a relatively stable exchange rate between the Liberian and the United States Dollars, though the prices of some basic commodities were hitting the ceilings.
For nearly two years, the exchange rate between the US dollar and LD stood at US$1.00 to LD$150.00.
However, what Liberians were not expecting at this time was a depreciation of their local currency to the US dollars, amid the printing of billions of new family of Liberian dollar banknotes and coins.
But, the Executive Governor of the Central of Liberia (CBL), J. Aloysius Tarlue, presenting Liberia’s monetary policy report that says, the exchange rate of Liberian dollar is expected to depreciate.
“During the quarter under review, both end period and period average exchange rate of the Liberian dollars depreciated slightly. The end period exchange rate to Liberian dollar is projected to further depreciate to 7.3% for the first quarter of 2023,” Governor Tarlue disclosed.
While the Government of Liberia, through the CBL, has lately made some big gains with the exchange rate stabilization, uncertainties are now stirring in the financial market of the country.
Speaking to journalists Thursday, February 23, 2023, at the Central Bank of Liberia, Governor Tarlue said, the Monetary Policy Committee assessed the implication of global economic developments on the Liberian economy to inform monetary policy decisions for the quarter ahead.
The downward trend of the exchange rate of the Liberian dollar, Governor Tarlue said, is due largely to several factors including high demands for US dollars by businesses for input payments to replenish their stocks after the December 2022 festive seasons.
“In this regard, the Committee took the following decisions: One, to maintain the monetary condition, to maintain monetary policy rate at 15% until its next assessment meeting in the second quarter of 2023,” said the CBL Governor. He referenced some financial measures slated for 2023.
“Secondly, to maintain the reserve requirement ratio of the Liberian dollar and the US dollar by 25% and 10% respectively and three, to sell the two-week issuance of CBL bills exclusively to commercial banks and the one month, three months CBL bills to both commercial banks and retail investors,” he said.
Nevertheless, the CBL Monetary Policy Committee also found few positives. Governor Tarlue touched on the ‘Monetary and Financial Market Developments’ in the country.
“Remittance through banks was relatively strong in the fourth quarter as net remittances inflows rose to US$68.5 million from US$62.5 million from the third quarter in 2022.
At the same time, inbound remittances terminating to mobile wallet rose by 8.9% to US$91.6 million from US$84.1 million in the third quarter of 2022.”
He added: “Sectorial Annual Growth for 2022, the mining and pending sub-sectors grew by 14% below the 17.6% in 2021, while Agriculture and Fishery sub-sector expanded over 1.2% from 1% in 2021 mainly through increased oil palm production.
The manufacturing sector, through rising cement production and services through increased electricity supply sub-sector grew by over 2.2% and 4.8% in 2022 respectively,” he added.
Despite other positive developments like Liberia’s projected annual GDP growth rate of 4.8%, the CBL Committee expressed concern about the rise in inflation forecast to 9.8% owing to tightening financial conditions in the global economy and other structural constraints.
