19 March 2014

Liberia: 'For Nothing Talk' - CBL Governor Jones Fires Back At Critics

Central Bank Governor Dr. J. Mills Jones has vehemently rejected claims by his critics both in and out of government that he and other governors of the CBL are politicizing the bank's monetary policy for their selfish gains describing his accusers as engaging in empty talks.

"Let me repeat a point made on other occasions: the CBL has not been engaged in directly making loans to any business entity," he said.

Governor Jones said the bank did not directly give any funds under the initiatives to the Liberian Business Association adding that people who continue to say so are misinforming the public. He said commercial banks are fully involved in all of the initiatives that the bank has embarked on and were consulted on many occasions before those initiatives were launched.

"To clarify that the CBL has not been making loans to individual businesses, let me refer to a paragraph in the agreement on the placement/deposit with the banks on due diligence: "the (name of bank) commits itself and undertakes to exercise due diligence in assessing the creditworthiness of all potential borrowers, consistent with its lending practices, it shall ensure that loans from the placement shall be made to only creditworthy Liberian-owned small and medium enterprises"," he said.

"Does this look like an operation of the Executive Governor "dividing public funds"?" He asked his critics.

"A baseless statement no matter how many times it is repeated, no matter how important the office of the one making the statement, no matter how loud the voice of the person making the statement is nothing more than a baseless statement. Put simply, empty talk is empty talk."

Addressing journalists at the bank's edifice on Warren and Carey Streets in Monrovia, Governor Jones said the CBL has only embarked on a policy that aims at making an impact on the lives ordinary Liberians.

"The Central Bank is not doing anything strange, except that the Bank is breaking new paths in the Liberian economy," said Governor Jones. "But is that a politicization of the Bank? That the people appreciate what the CBL is doing to empower them financially should be seen for what it is."

Governor Jones said economic empowerment has implications for ensuring a stable macro economy and it also contributes to a better distribution of income. He said empowering people economically also helps them get out of poverty by strengthening their purchasing power to support local investment and this is all the bank has been trying to do over the years for which executives of the bank have been targeted by the same government elements for which it is trying to work.

"If there is any lesson to be learned, it is that we all should do our jobs well, the people will appreciate all of us," he said. "What the CBL is doing has broad international appeal and support. It has nothing to do with "dishing out the people's money"."

Protecting Liberia's reserves

Commenting on assertions made by high ranking individuals in both the legislative and executive branches of government, that the CBL through him (Jones) and other bank officials have put the country's reserves in harm's way and the need for action to stop the Executive Governor from dishing out public funds or to stop the CBL from giving out loans he said such assertions were far from the truth.

Governor Jones said the CBL over the last several years has been actively trying to stabilize the exchange rate through regular auctions of United States dollars to the private sector, adding that since 2010, for example, the bank has sold over US$242 million to the market.

He said the fact that the CBL today has over 48 times the amount of reserves the current leadership met when it took over in 2006, despite these sales, suggests that the bank's management under his watch has not been in the business of misusing the country's reserves.

"This is "for nothing talk". Where is the evidence of misuse of the country's reserves?" he asked.

Continued Jones: "It should also be pointed out that the CBL has also cooperated in helping the government smooth out its spending to keep certain development programs on track by providing short-term borrowing facilities. The CBL intends to continue such constructive engagement with the government, evidence by the present discussion with the government for a short-term facility to support the country's infrastructure program. The CBL has also provided a facility to the LBDI to support lending to private firms implementing government's road projects. This should lay to rest the argument that the CBL is just out there "dishing out the country's money to certain people"."

Dr. Jones said that it was under his leadership that a Reserve Management Guide was developed and approved by the Board of Governors of the CBL which made it a policy that neither the Executive Governor nor any Deputy Governor can just go 'dipping' into the reserves of the CBL, something he said relevant authorities in government are aware of.

"Even amounts put up for auction are decided upon after a process of discussion, after which the appropriate instructions are signed by the appropriate authority," he said.

The CBL governor said the foreign reserves of the CBL are not government revenues deposited at the CBL as is perceived by many. He said the bank does not touch government revenue, except upon instructions from the Ministry of Finance and that is for the making of payments on behalf of the government adding that people who make such assertions that the CBL is using taxpayers' money for its purposes are just simply wrong.

Credit Stimulus

Giving a brief synopsis of the CBL's stimulus package that has created much political disturbance in the government,which has seen the legislature passing a bill which seeks to bar the current governors of the bank from running for political office and also amending several sections of the ACT creating the CBL, Governor Jones said the decision came about in December 2010, when the Board of Governors passed a resolution to launch a credit stimulus initiative for Liberian-owned small and medium enterprises.

"The Board's decision came against the background where Liberian businesses were facing serious problems when it came to interest rates and the time given to pay off loans," he said.

Continued Jones: "The commercial banks had also informed the CBL that they were unable to extend the time for loan repayment because they were facing a situation of short-term deposits. Meanwhile, it was no secret that Liberian businesses were on the margins of the Liberian economy. The Board of Governors believed that this situation, which had existed for a long time, was not good for the economy, and was a major reason for the slow pace of development and widespread poverty in the country."

Governor Jones said the Board of Governors considered that it had the mandate to act, to do something about the situation, and so made medium-term deposits with the local banks after seeking the advice of its legal experts before acting. He said there is clear evidence that this method introduced by the bank has been effective and as a result, since the initiation of the program, interest rates have dropped and repayment periods are longer in general.

He said all of the agreements were notarized and also duly probated and registered at the Probate Court of Montserrado County. The National Legislature passed into law an amendment to the CBL act and has been accordingly signed into law by the president.

In passing into law, an amended provision of the March 18, 1999 Act authorizing the Establishment of the Central Bank of Liberia, the law prohibit the Executive Governor of the Central Bank of Liberia and members of the Board of Governors from contesting political office(s) while serving in their respective offices and shall not be qualified to contest any elected office within three years consecutively after the expiration of their tenure with the CBL.

The passage of the bill and subsequent signing into law by the President was a result of a report submitted to plenary by a special committee established by the Plenary of the Liberian Senate chaired by the Ways, Means and Finance committee. The special committee chaired by Senator Isaac Nyenabo, Chair of the Senate ways, Means and Finance Committee included members from the Judiciary committee, chaired by Senator Fredrick Cherue of River-Gee County.

The committee was mandated by the plenary of the Liberian senate to investigate the CBL on its Micro Credit Loan Scheme plans to print and supply legal tender banknotes by the CBL Governor Jones to ascertain facts if the governor had the power under the Liberian constitution and the CBL act of 1999.

Sub-Section 3 of Part IV. Section 13 of the CBL amended Act calls for the removal of the board of governors from office upon a bill of impeachment by the House of Representatives, Upon finding by a majority of the Board of Governors and the recommendation of the President, for several reasons which include; Gross Breach of Duty, Misconduct of Office, Conviction of a Felony and Being declared Bankrupt and Violation of paragraph (a) and /or (b) of sub-section 1 of section 13.

Part IX Section 44 which prohibits the Central Bank of Liberia from engaging in trade or participating directly or indirectly in the ownership of any financial, Agriculture, Commercial, Industrial, or enterprises was also amended. The law has led to protest on Capitol Hill in favor of Dr. Jones with many of protestors describing the law as targeting Governor Jones.

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