The crisis that has engulfed Liberia’s monetary and banking sector requires urgent leadership solutions at all levels, other than the blame game. It is no secret that the Country is challenged by the shortage of Liberian Dollar banknotes, thus making it difficult to access Liberian Dollars at banking and financial institutions, compounded by mutilated banknotes on the market.
Many contributing factors have been cited over time, ranging from the hoarding of Liberian Dollars and foreign currencies by businesses and individuals who keep huge sums of their money in private vaults at home, fearing the difficulty of easily accessing their money when they need them for goods and services.
Hence, the banking sector is left insolvent, stripped by huge deposits that could otherwise have made transactions easier across the board.
The liquidity problem is even grave during this time of the year when holiday shoppers from across the country and visitors are in dire need of liquid cash to facilitate numerous transactions. Hoarding of money to invoke artificial scarcity, marred by fears, has in some way pressured and influenced formal cash transactions in the banking sector, in addition to other internal and external factors. The bottom line is that we have a cash flow problem at hand. Fiscal probity and discipline alone is not enough.
Liberia’s dual currency system that allows for trading in both Liberian and United States Dollars is also an added complication in some instances. In a heavily import driven economy, there has been a system in place wherein there was the withholding of a small portion of foreign exchange remittances from abroad, but that policy has somewhat been put on hold by many financial institutions that have limited access to local currency.
Even prior to this monetary dilemma, Central Bank of Liberia Authorities, some time ago, made appearances before the Liberian Legislature and made a case for the printing of additional Liberian banknotes, aside from the four-billion Liberian Dollars earlier printed in LD 500 Dollars denomination.
That amount, CBL Authorities argued before the Legislature at that time was not sufficient to offset the growing demand for Liberian Dollars on the market, and went to the extent to advance the need to print smaller denominations of Liberian banknotes for easy transactions by ordinary people.
Taking politics from all of this, it is hard time that Liberian technocrats in the banking and financial sector get together in a round table dialogue and meet the appropriate stakeholders at the Legislature in the various banking and finance committees at the House of Representatives and the Senate, to avert any financial crisis in the money market in Liberia. The early they do that, the better it is for the Country.
The public is already feeling the crunch and this is no time to flex a political muscle or demonstrate political grandstanding at the expense of the public. It is all the more clear that Central Bank Authorities are always in the position to give the necessary explanation on the status of the currency situation in Liberia whenever called to do so.
But at this stage, restoring confidence in the banking sector to assure easy sector not just to Liberian Dollars, but unhindered operations of the banking sector is key to Liberia’s financial stability.
As we enter the new year, it is all the more important that all stakeholders in the financial sector, public and private, get together in an open forum with the Legislature in finding a candid and objective way out of this monetary nightmare to safeguard the financial integrity of our nation and restore confidence in the banking sector once again.
Liberia’s local and international partners, and more so the Liberian public, are all standing by and watching to see how we do this, void of the political grandstanding of the day, as money matters are strictly technical in nature.
Presented by: Tetee Gebro