19 March 2014

Liberia: Nonsense!

Central Bank of Liberia or CBL, Executive Governor J. Mills Jones has described arguments opposing the bank's microfinance loan scheme here as "nonsense and baseless."

Jones had been summoned several times by both the lower and upper houses of the Liberian Legislature over the loan scheme, with many holding the view that the CBL's initiative had a political motivation, before an act to amend the CBL law was passed.

The CBL amended act requires members of its board of governors or officials with political ambition to resign three years prior to elections.

But Jones responding to critics here on Tuesday at a news conference said: "This is nonsense- only intended to confuse the people that the CBL is not working in their interest. The question is, why go through such length to beat up on the CBL?"

He said most of the CBL's initiatives have been done in United States dollars and questions how does an increase in the supply of US Dollar lead to the fall in the value of the Liberian Dollar relative to the US Dollar.

Jones further took a whip at his critics who fear his entering the political race could undermine their own ambition saying "When there was no answer to this question (above), some began to talk about the CBL "infusing" Liberian Dollars into the economy," thus spurring an increase in the value of the US Dollar against the local currency.

He said what the public should notice about the bank's critics is that "they don't say how the CBL is doing this." Describing the action of the bank's critics as a campaign of misinformation, Jones noted that commercial banks were involved in all of the initiatives. According to him, these commercial banks were initially consulted on many occasions before the initiative was launched.

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

Not only were these agreements notarized, he noted, they were also duly probated and registered at the Probate Court of Montserrado County.

"Does this look like an operation of the Executive Governor dividing public funds? The statement is a baseless one 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," Dr. Jones stressed.

Jones, who had not only been criticized by the members of the Liberian Senate, House of Representatives, but also Finance Minister Amara Konneh indicated that it was under his leadership that a Reserve Management Guide was developed and approved by the Board of Governors.

"Neither the Executive Governor nor any Deputy Governor can just go dipping into the reserves of the CBL," he asserted, maintaining that even amounts put up for auction were decided upon after a process of discussion- following which the appropriate instructions are signed by the appropriate authority. Dr. Jones also pointed out that the foreign reserves of the CBL were not the government revenues deposited at the CBL. "The CBL does not touch government revenues, except upon instructions from the Ministry of Finance to make payments on its behalf. So those who talk about the CBL using taxpayers' money for its purposes were just simply wrong," he noted.

It should also be noted that 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, Dr. Jones told the news conference in Central Monrovia. Jones, who refused to take questions from members of the media, noted that since 2010, the CBL has sold over US$242 million to the market, emphasizing the fact that today the CBL, has over 48 times the amount of reserves when the bank came in 2006, suggests that the bank's management has not been in the business of misusing the country's reserves. "This is for-nothing talk," he noted, asking his critics as to where is the evidence of misuse of the country's reserves?

"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," Dr. Jones concluded.

Governor Mills Jones' assertions are the first public pronouncements since the passage and signing into law a few weeks ago of the amended 1999 CBL Act by Legislature and President Ellen Johnson-Sirleaf. The Act was initially passed by the Liberian Senate and unanimously and speedily concurred with by the House of Representatives.

A mass demonstration by the Liberian business community, youth, women and student groups, as well as civil society groups, among others preceded the House's concurrence.

There was a small demonstration on the grounds of the Capitol Building in support of the passage of the Act preventing all governors, including Executive Governor Mills Jones from participating in all political activities. They are allowed to do so provided they resign three years to the electoral process.

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