30 January 2013

Liberia: Pres. Sirleaf Satisfied With CBL Supervisory Role

President Ellen Johnson Sirleaf has said that Liberia's banking system remains strong and stable, attributing same to the satisfactory supervisory effort of the Central Bank of Liberia (CBL). The President said consequently, banks are in the position to play a major role in sustaining the growth of the economy, as evidenced by the 19.7 percent rise in credit to the private sector - from L$15.7 billion in November 2011 to L$18.8 billion a year later.

President Sirleaf also said total capital in the banking system rose by 4.4 percent, to L$7.9 billion, at end-November 2012, and the capital adequacy ratio was 22.5 percent, well above the minimum regulatory requirement of 10 percent.

Relative to deposit in the banking sector, President Sirleaf said total deposits grew by 12.1 percent to L$38.8 billion at end-November 2012, saying "this scenario, we believe, is consistent with the vote of confidence of investors and the public in the banking system."

President Sirleaf said notwithstanding these achievements, the level of non-performing loans remains a matter of concern.

The Liberian Chief Executive noted that recent efforts by the CBL to encourage the restructuring of delinquent loans are appropriate, saying "Defaulters should take advantage of this opportunity."

"If we are to have a well-functioning banking system, borrowers must repay their loans. The government will support actions deemed necessary by the CBL to deal with this problem," President Sirleaf stressed.

Delivering her Annual Message to the joint session of the National Legislature on Monday of this Week, President Sirleaf said in keeping with its strategic goal of reforming the financial sector, the Central Bank has begun reform of the insurance sector, beginning with efforts aimed at ensuring that all insurance companies are adequately recapitalized and their governance structure strengthened.

"An improved insurance industry will contribute towards deepening the overall financial system, thereby enhancing economic growth. This will also enable us to enforce or draft laws requiring insurance of government properties," the President said.

She disclosed that at end-December 2012, the Central Bank's net reserves position was US$335.4 million, providing a better cushion against external shocks to the economy and enabling the Bank to maintain broad exchange rate stability.

She further said during the year, the CBL, through its foreign exchange auction program, provided US$72.4 million to the market to help maintain a stable macroeconomic environment. "An auction program was opened to small traders, including the Liberia Business Association, the Liberia Marketing Association and women in cross-border trade, which has helped to shield these small traders from exploitation by some unscrupulous foreign exchange dealers," the President said added.

"In its drive to support the private sector as the engine of growth for the Liberian economy, the Central Bank launched three major initiatives: US$5 million was made available through the banking system to enhance credit to Liberian-owned businesses; US$10 million was allocated to stimulate the housing market mortgage lending; and US$7.5 million was earmarked to support agricultural lending," President Sirleaf acknowledged.

The President said the microfinance sector continued to expand, as nine new institutions were certificated by the Central Bank. Over L$200 million was provided to microfinance institutions throughout the country for on-lending to their clients and members.

She said the number of credit unions registered with the Bank increased to 220 in 2012, up from 69 recorded at the beginning while opportunities for the expansion of mobile money in Liberia continue to be explored, as another way to build more inclusive banking.

The President said the Central Bank of Liberia, in partnership with the West African Monetary Institute (WAMI), continued modernizing the National Payments System, which is expected to be concluded at the end of this year, noting that the CBL has drafted and submitted to the National Legislature a Payment System Act, which provides the legal and regulatory framework for the system.

"Honorable Legislators: We are pleased to report that the Ministry of Finance and the Central Bank of Liberia are in consultation with your leadership to complete necessary preparations for the issuance of Treasury Bills, or T-Bills. A Treasury Bill is a paperless short-term borrowing instrument issued by governments through the Central Bank to raise money on a short-term basis for a period of up to one year. T-Bills are issued in maturities of 91, 182 and 364 days and sold at a discounted price to reflect investor's return and redeemed at face value. T-Bills are a cash management instrument that will provide the financial means to deliver critical services and infrastructure on time," she told the Legislators.

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