27 June 2013

Liberia: Changing the Rhetoric - Liberia's Central Bank Governor Flip Flop On Loan Giveaways

Central Bank governor (CBL) Dr. Mills Jones flip flopped Wednesday when he along with other senior executives of the CBL appeared before the Ways, Means and Finance Committee of the House of Representatives.

Responding to a question from members of the committee as to what part of the Act creating the Central Bank of Liberia gives him the right to give out loans to the Liberia marketing Association (LMA) and the Liberian Business Association (LIBA) in the name of the Bank, Governor Jones said; "LMA and LIBA are not financial institutions and we have not given one cent to the institutions named. The five million you heard about being given to LIBA was done through Banks."

When cautioned by Representative Moses Kollie, a member of the committee, that he was speaking under oath, Governor Jones said: "According to the advice that I received from our legal office at the CBL they have told me that the intervention we are making into the National Economy is in consistent with the law that is all I can say about that."

Part 2; section 4 of the act establishing the CBL states that; the Functions of the Central Bank of Liberia shall have the power and authority to issue legal tender bank notes and coins; administer the currency laws and regulate the supply of money; provide credit to bank-financial institutions on a discretionary basis; act as fiscal agent for the Government; administer the New Financial Institutions Act of 1999 and regulate banking activities; regulate bank and non-bank financial institutions, as well as non-bank financial services institutions; hold and manage the foreign exchange reserves of Liberia, including gold; advise the Government on financial and economic matters; conduct foreign exchange operations; play an active role in collaboration with bank-financial institutions in the creation and maintenance of efficient and safe mechanisms for payments, clearing and settlements to meet the needs of the financial markets, commerce, government agencies and the general public. The Central Bank shall execute this responsibility through permanent consultations with the bank-financial institutions and through implementation of the proper regulations and standards, as needed.

Jones told the committee that the CBL Micro-Finance department has been working along with different institutions to establish credit unions and funds are been made to the credit unions who are non-bank financial institution.

Jones said: "Each time someone comes and say they need assistance they go the Micro-Finance section; if it is small institution, the department helps them with training and setting up their own institution. In the villages there are institutions setups for village savings and micro-finance institutions. We must look at the situation that we have in Liberia, we must be contentious, you will not find big banks in the village but they have system."

Jones was also reminded by Representative Emmanuel Nuquay about his latest trip to Buchanan Grand Bassa County where the governor himself called beneficiaries of the loan not to disappoint the CBL. In quote he said: "Don't let the Central Bank down, we are giving you this money, don't let the CBL down". Rep. Nuquay then asked the governor why he was himself giving the money and not the commercial banks as required by the act.

Responding to the question, Dr. Jones said: "I may not be inept at the English language. The speech was a speech I was making and those were my choice of words that I used because I thought that it best explain what I intended to do."

Nuquay was quick to point out that as lawmakers, they are not against giving out money to Liberians for empowerment but want it done rightly so that in the end, there will be no report that millions of dollars have gotten missing from the country's reserves.

He told committee members to forward whatever suggestions they may have for the CBL as it relates to security measures or guarantees put in place to get back money given as loans to people and institutions.

Speaking earlier the CBL governor told the committee that the bank has contributed over USD$ 22 million to the national development of the country which he named as; the provision of USD $7 million to the country agriculture sector, USD$ 10 million for mortgage program and USD$ 5 million to facilitate Liberian businesses.

He also said, the CBL has provided funding in the tune of USD$ 20 million to the government of Liberia and over USD$ 12 to the development of the Freeport of Liberia.

After more than one hour of discussion between the CBL and members of the committee, the committee asked the governor to reappear on Monday with a comprehensive report on funding provided, and monies provided as loans to business institutions and individuals.

Other institutions appearing before the committees were the Ministry of Health and Social Welfare, Bureau of Maritime Affairs, and the Ministry of Youths and Sports.

In separate presentations, the Ministry of health said, it has contributed LD$ 13.9 million to the National budget through fees collected from birth registration, and LD$ 478,800 from the issuance of yellow fever book. For their part the bureau of Maritime Affairs guaranteed to the committee that it (BMA) should raise the over USD$ 20 million projected in the 2013/14 fiscal year budget by the Finance Ministry.

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