By: Varney Dukuly
MONROVIA: In an attempt to halt the fast growing exchange rate between the Liberian dollar and United States dollar, the government of Liberia (GOL), through the Ministry of Commerce, Liberia Revenue Authority (LRA), Central Bank of Liberia (CBL), and the Ministry of Finance and Development Planning, has handed money exchangers a painful defeat by blocking their alleged plan to inflate the foreign exchange rate on the local market.
For the past three weeks, the exchange rate of LD has been surging almost daily from 167 in May to 175, 180, 185, 190 and 200 up to press time yesterday.
But, the government through the economic institutions named above has observed that the alleged move by money exchangers was intended for profiteering, speculation and other selfish reasons at the detriment of the interest of the larger population.
“The government of Liberia through the Ministry of Commerce, the Liberia Revenue Authority, the Central Bank of Liberia and the Ministry of Finance has observed that some individuals and businesses are in the habit of frequently manipulating the exchange rate between the United States dollar and Liberian dollar. Such practices amount to economic sabotage, which is a crime under the Liberian law,” said the government in response to the prevailing exchange rate crisis on the local market.
The Weah’s administration denounced the purported manipulation of the exchange rate which has skyrocketed to almost L$200 to US$1 with directives issued over the weekend saying:
“The government of Liberia hereby issues these directives against exchange rate manipulation as well as to direct the accessibility of Liberian dollar for payment for goods and services as the official legal tender for Liberia in keeping with Part V, Section 22 of the amendment and Restatement of the Act Establishing the Central Bank of Liberia 2020 (The Amended and Restated CBL Act).
These directives take immediate effect upon publication and shall remain in full force until otherwise advised by the government of Liberia,” the government added.
The monetary policy measures from the government sided with the Central Bank of Liberia and Ministry of Commerce that have objected to money exchangers and business entities’ alleged refusal to display daily rates published by the CBL and accept Liberian dollar as legal means of payment for goods and services within the commerce of Liberia.
The GOL decision, apparently dealt a blow to many unscrupulous businesses and money exchangers whose actions the government said is for the purpose of profiteering at the detriment of the interest of the larger population.
“Consistent with Part II, Section 6(d) and (e) and Part VI, Section 29 (2) of The Amended and Restated CBL Act (2020) governing exchange rate policy and management, all businesses including supermarkets, stores, schools, colleges, universities, hospitals or medical facilities, hotels, restaurant and forex bureaus are hereby required to publicly display their exchange rates between the US dollar and Liberian dollar at their respective places of business, which must be in line with the selling rate published by the CBL. The published daily selling rate can be found on CBL website and in several local newspapers,” the government wrote referring to money exchangers.
“Part V, Section 22 (1) of the CBL Act clearly states that prices for all transactions in Liberia shall be indicated in Liberian dollars and cents. This means that the Liberian dollar is the official currency of transactions, notwithstanding the US dollar being a legal tender. In consonance with this statutory mandate, all businesses, including schools, hospitals, universities, hotels, restaurants and other forms of business are required to state their prices in Liberian dollar (and their equivalent in US dollar) and also accept the Liberian dollar as legal means of payment,” the government said.
In addition, the Weah-led administration is warning that businesses and institutions failing to adhere to the above directives shall face stiff penalties under the law.
The government: “To enforce these directives, the relevant government agencies have established hotlines to facilitate public interactions: Central Bank of Liberia (5455) and LRA (0777572572). Citizens and residents are encouraged to use these hotlines to report violators of these directives.”
These directives come on the heels of prices for just everything Liberians buy: gas, foodstuff, clothes, cars, even TV have spiked in recent times.
Inflation, which the government has said is in single digit, is suddenly the top concern most people have about the economy.
And it all seemed to catch the Weah’s administration by surprise. But the government through its economic management team attributes the situation to a combination of factors including the Covid-19 pandemic, supply chain problems, Russia’s invasion of Ukraine and a dramatic shift in import and export patterns.
The CBL said to stabilize the economy it issues bills every Friday through its regular auction window. The CBL bills are part of the monetary policy tools of the Bank.
The Board of Governors of the Central Bank of Liberia (CBL), representing the Monetary Policy Committee (MPC), recently raised the Monetary Policy Rate (MPR) by 250 basis points from 15% in the first quarter of 2023 to 17.5%, to contain further inflationary pressures, going into the third quarter of 2023.