Liberia: Commercial Banks Not Secure

21 November 2019

-Cyril Allen alarms

The chairman emeritus of the former ruling National Patriotic Party (NPP) Chief Cyril Allen blames the previous administration for the current cash shortage suffered by commercial banks in the country.

Currently an executive member of the governing council of the ruling CDC, he argues that commercial banks are not financially secure because the Central Bank of Liberia under former executive governor Dr. Mills Jones allegedly depleted reserves of commercial banks to renovate the current Central Bank headquarters in Monrovia.

Speaking to the NewDawn in Monrovia via mobile phone, Chief Allen recalls that during the administration of Dr. Jones under the watchful eyes of former President Ellen Johnson Sirleaf, the Central Bank of Liberia generated only US$5 million as profit for the entire 12 years but, at the same time, the CBL renovated its structure located on Ashmun Street in the tune of US$21 million without borrowing a dime.

He wonders where authorities of the CBL generated funds to have undertaken such huge financial task without tempering with reserves of commercial banks, something, which he says, was impossible.Chief Allen describes the newly renovated CBL headquarters as a "white elephant" for the government, while reserves of commercial banks here are in 'damaging red.'

According to him, former governor Jones allegedly intimidated commercial banks when management of those banks tried to raise question about their reserves, and that many fell prey to the threat on grounds that the CBL is the regulatory and monitoring arm of the government for monetary activities. He says the current financial crisis faced by commercial banks originated from former President Ellen Johnson Sirleaf.According to him, Dr. Jones failed to realize that tempering with commercial banks' reserves in the name of constructing modern headquarters for the Central Bank of Liberia would have had this kind of long-term effect on the market.

When this paper contacted Dr. Mills Jones via mobile for reaction, his private phone rang endlessly on several occasions.The Central Bank of Liberia was established on October 18, 1999 by an Act of the National Legislature of the Republic of Liberia. It became functional in 2000 and succeeds the National Bank of Liberia (NBL). Mr. Elie E. Saleeby served as the Bank's first Executive Governor.

The principal objective of the CBL is to achieve and maintain price stability in the Liberian economy. To this end, it seeks to preserve the purchasing power of the national currency; promote internal and external equilibrium in the national economy; encourage the mobilization of domestic and foreign savings and their efficient allocation for productive economic activities; facilitate the emergence of financial and capital markets that are capable of responding to the needs of the national economy, and foster monetary, credit and financial conditions conducive to orderly, balance and sustain economic growth and development.

The powers of the Bank are vested in a Board of Governors, responsible for the formulation and implementation of policy. The Board consists of five Governors who are appointed by the President of Liberia subject to confirmation by the Liberian Senate.Meanwhile commenting on government's request to print new Liberian banknotes, Chief Allen thinks this is not a bad idea, but he urges the Weah administration to focus on agriculture and safe the country's reserves in gold and diamond.

He says to revive the economy, government should invest in large farming and use the expected new banknotes for mineral processing, stressing a need to add value to natural mineral deposits thru processing and saving them in the reserve of the Central Bank of Liberia, instead of using banknotes as reserves.

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