The Inquirer (Monrovia)

21 January 2014

Liberia: Mounting Concerns Over High U.S. Rate

There is mounting public concern about the high rate of United States dollars to the Liberian dollars throughout the country.

For months now, the $US continue to increase rapidly, thereby affecting the prices on the market, as well affecting the livelihood of those who cannot afford their daily bread.

Officially up to press time, the Central bank of Liberia, which is the regulator, has announced that the buying rate is L$ 86.00 to US$ 1.00, while the selling rate is L$87.00 to US$ 1.00.

The Central Bank has clarified that it has no control over the rates, rather they are indicative rates based on results of daily surveys based on foreign exchange market in Monrovia and its environs.

Observers say the increment is alarming and it might likely go up to L$90.00 to US$ 1.00 by the end of this week.

The high increment that has been discussed on daily Talk-Shows has also sparked out serious debates amongst Liberians both in the country and abroad.

A Liberian Economist, Sam Jackson told the INQUIRER on Monday that the problem affecting the increment in the rate can be solved if the government designs measures to invest in the forestry, fisheries and agricultural sectors of the country.

Mr. Jackson observed that there is a serious problem with the trade gap in the country and if such is not handled properly, the problem will continue to increase.

He made reference to the millions of United States Dollars that have been spent by the government and other business executives to import goods, especially fuel, and rice in the country.

According to him, the problem with the trade gap has an impact in the high rate and if the Government doesn't engage in more productivity and exports, the problem will continue to exist.

Mr. Jackson pointed out that the Central Bank of Liberia has Expansive Policy and has the responsibility to regulate the Liberian Dollars but doesn't have control over the United States dollars.

The former Planning & Economic Minister, Dr. Togba Nah Tipoteh says the increment in the rate is a sign of bad governance and a clear indication that the Government doesn't value its currency.

He pointed out that Liberians allow foreigners to take over the country's raw materials at a lower cost, because they (Liberians) don't value their money. "These same foreigners would transform the raw materials and sell their goods to Liberians at a higher price," he added.

Dr. Tipoteh pointed out that the rate will continue to increase because top government officials have obligations abroad rather than in Liberia, something that requires American dollars.

The veteran Liberian Economist warned that unless the government attaches value to its currency like in the case of Ghana, the problem will continue to be on the increase.

The hike in the US dollars rate has also raised alarm among members of the Liberian Senate who took the issue to the plenary for discussion on the unprecedented increase in the exchange rate of the Liberian dollar to the United States dollars. The Senators have observed that the situation has been uncontrollable across the country during the past few months.

The Liberian dollars continue to experience serious devaluation with respect to its exchange rate to the United States dollars, where US$1.00 is now being exchanged for or 86- 87 Liberian dollars.

At the second day sitting of the 3rd session of the 53rd Legislature, two Senators, George T. Tengbeh and Matthew Jaye of Lofa and River Gee Counties respectively wrote a communication to plenary informing that body to probe the continuous increase in the United States dollars rate against the Liberian dollars.

After the communication of the two Senators was read on the floor of the Senate's chambers, several lawmakers described the escalating exchange rate on the Liberian market as a source of embarrassment for the economy as a whole. They mentioned that the situation has caused prices of most commodities to hike on the local market.

While debating the remedy to the circumstances relative to the exchange rate, Maryland County Senator, H. Dan Morias predicted that if nothing is done to curtail the problem, the Liberian people may take to the streets and protest.

President Pro-tempore, Gbehzohngar Milton Findley, expressed regret over the reaction of the public especially the Liberian Business Association (LBA) when the leadership of the Senate took the Central Bank of Liberia (CBL) to task on the matter.

Senator Findley recalled that the escalating exchange rate was discussed about six months ago when the Senate mandated its committee on Banking and Currency to conduct a public hearing on the prevailing rate (78-79) at the time.

"If this rate reaches 90 and above, we will be in trouble because we refuse to take action. The common man suffers when these things happen. This is alarming and so we must act now," Senate Pro- tempore asserted.

In another remark, Grand Kru County Senator, Peter Coleman, said the condition unfolding now in the country has increased poverty for the Liberian people.

Senator Coleman who chairs the Senate Standing Committee on Gender, Health, Women and Children Affairs and Social Welfare argued that such condition is a big problem for the poor who do not have access to the United States dollars, but are expected to make purchases based on the current exchange rate.

With repeated comments on the floor of the Senate, Vice President, Joseph N. Boakai who was presiding over the day's session decided to entertain a motion on the two Senators' communication.

Maryland County Senior Senator, John A. Ballout, proffered a motion that the Senate's Committee on Banking and Currency headed by Grand Gedeh County Senator, Isaac W. Nyenabo, report to plenary within a week on the state of the affairs surrounding the exchange rate on the market.

Liberia is the only country in the sub-region that is adopting a dual currency regime. That is, the country simultaneously allows the Liberian dollars and the United States dollars to circulate freely in the same economy.

Meanwhile, the National Coalition of Civil Society Organizations of Liberia is calling on the government to quickly address the issue of the US exchange rate in the country.

The group alarmed that currently the rate stands between 86 to 87 as exchanging rate while the buying is 88.5 in some exchange bureaus and it is because of the daily hike in exchange rates that prices of goods, gasoline and transportation have increased overnight without the intervention of the government and all others in the areas of controlling finance in the country.

The group said it is demanding the government to institute vigorous measures to reduce the US dollar rate while mechanisms are put in place to systematically monitor would-be violators.

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