Monrovia — The Central Bank of Liberia (CBL) has announced key economic policy measures following its first Monetary Policy Committee (MPC) meeting of 2025. Held on January 16, the meeting reviewed global and domestic macroeconomic developments for the last quarter of 2024 to determine the Bank's policy stance for the first quarter of 2025.
Global Economic Developments
In the communique read on behalf of the MPC, CBL Acting Executive Governor Henry F. Saamoi, noted global economic growth stabilized at 3.2% in 2024, a slight decrease from 3.3% in 2023, reflecting persistent supply chain disruptions caused by geopolitical tensions. Global inflation eased to 5.8% in 2024, down from 6.7% in 2023, with advanced economies recording an inflation rate of 2.6% and emerging markets 7.9%. However, Sub-Saharan Africa saw inflation peak at 18.1% due to food price pressures and structural weaknesses in agriculture.
Saamoi, who also serves as Chairman of the MPC said for 2025, global inflation is projected to moderate further to 4.3%, but risks remain, including escalating regional conflicts, prolonged monetary policy tightening, and financial market volatility. Favorable trends in global commodity prices, including reduced rice and fuel costs and increased export commodity prices, were highlighted as positive for Liberia's economy, despite a widening trade deficit.
Domestic Economic Developments
Liberia's economy experienced a 1.7% contraction in quarterly Real GDP (QRGDP) growth during the fourth quarter of 2024, attributed to reduced production, monetary contractions, and lower consumption. The MPC projects a sluggish start to 2025 but anticipates stronger economic activity in subsequent quarters, driven by government-related projects and construction.
Consumer prices rose by 8.7% in the last quarter of 2024, up from 5.9% in the previous quarter, with a further increase projected in early 2025 due to rising food prices. However, the Bank expressed confidence that inflation would revert to single digits in later quarters.
Banking and Financial Sector Developments
The banking sector remained stable but showed mixed performance in key indicators. While capital increased by 0.5%, total assets, deposits, and loans declined. Non-performing loans (NPLs) fell to 19.2% but remained above the CBL's acceptable limit of 10%. The sector showed a concentration of loans in trade, personal, services, oil and gas, and construction sectors, which also recorded the highest share of NPLs.
Private sector credit grew modestly in both Liberian and U.S. dollars. Liberian dollar credit rose by 2.7%, primarily driven by agriculture and services, while U.S. dollar credit increased by 3.3%, with notable growth in manufacturing and agriculture.
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Monetary Aggregates and Fiscal Developments
Broad money supply (M2) declined by 1.4% in the fourth quarter of 2024 due to reduced domestic credits. However, the Liberian dollar in circulation surged by 25.4%, reflecting increased spending during the festive season. Fiscal operations saw a net injection of L$13.2 billion, alongside US$37.4 million, supporting de-dollarization efforts.
Exchange Rate and External Sector
The Liberian dollar appreciated against the U.S. dollar during the fourth quarter, supported by increased foreign exchange inflows and a tight monetary policy. The trade deficit widened due to higher import payments, but the MPC expressed confidence in maintaining exchange rate stability through effective liquidity management.
MPC Policy Decisions
To address economic challenges and maintain stability, the MPC announced several measures including monetary policy rate (MPR) which is maintained at 17.0%, consistent with expectations of rising bank currency; reserve requirement ratios: Maintained at 25% for Liberian dollars and 10% for U.S. dollars and reintroduction of Corridor System: Introducing a standing credit facility at MPR plus 2.5 percentage points and a standing deposit facility at MPR minus 7.5 percentage points.
The Acting Executive Governor Saamoi, Chairman of the MPC, reassured the public of the CBL's commitment to monitoring economic developments and implementing policies to ensure macroeconomic and financial stability.
