The Central Bank of Liberia (CBL) has been summoned by the House of Representatives over the lack of stability of the exchange rate between the United States (US) and Liberian dollars at commercial banks and money exchange bureaus, including the CBL.
The CBL Executive Governor, Milton A. Weeks, will also explain the significant depreciation of the Liberian dollar on the exchange market and provide a stimulus plan to improve the exchange rate to the U.S dollar.
The Liberian dollar is currently trading at L$97 to US$1.
Nimba County District # 2 Representative Prince O.S. Tokpah, who is also the Chairman on the Committee of Internal Affairs, earlier complained that the disparity between the CBL and commercial banks is causing difficulties and embarrassment to the over 300,000 civil servants, most especially in settling their financial obligations to their creditors.
“Distinguished colleagues, many of these employees of government are indebted to Commercial Banks and individual loan providers who are now facing difficulties in settling their obligations in that the Central Bank is providing payment of allowance at L$91 for US$1, while Commercial Banks and loan providers are demanding payment at L$97 for US$1 rate,” Rep. Tokpah wrote.
The floating US currency has greatly affected prices of basic commodities that are mostly sold in Liberian dollars, which traders have to purchase in US dollars on foreign markets. To compensate for the loss in value in the Liberian dollar when exchanged to United States dollar, it’s an open-secret that traders increase the prices of their commodities, leaving consumers to feel the pinch.
Moreover, due to the absence of L$1 (one Liberian dollar) denominations in the local currency, the rate of L$97 to US$1 gives merchants an extra advantage. Any increment in the prices of products happens in multiples of L$5, causing a steeper hike in prices over time, instead of what would have been a
gradual L$1 increment.
Howbeit, the historic increase in the exchange rate and fluctuations come in the wake of the printing of the L$55m by the CBL. It may be recalled that Montserrado County District # 16 Representative Dr. Edward Forh, of the Congress for Democratic Change (CDC), said the printing of the new money would lead to the depreciation of the Liberian dollar – which is happening now.
This would be the second time the new CBL Governor will appear before the House of Representatives since his induction in May 2016. The CBL Executive Director’s first appearance was about the printing of new Liberian dollar bills in the amount of L$55m.
The House’s Plenary made the unanimous decision on Tuesday, July 5, during the 42nd Day Sitting. According to House’s Chief Clerk Mildred Sayon, the CBL Executive Governor is expected to stand before the 73-member body on Tuesday, July 12, in the House’s Chambers, at 11:00 a.m.