The government in early June will pay civil servants, and its obligations for goods and services, including payments to contractors and lessors about 80% in Liberian dollars in order to increase the sale of United States dollars to the Central Bank of Liberia (CBL) to restore its reserves, President Ellen Johnson Sirleaf has informed the Legislature.
The President said the increase in the level of domestic expenditure in Liberian dollars would also help the CBL’s targeted level in reserves as agreed with the International Monetary Fund (IMF).
The President’s letter, dated May 13, was read yesterday during the House session. It did not state when the Liberian dollar payments of salaries and other expenditures would end but indicated that it is likely to affect salary payments for all government employees.
“The reason for this decision as we approach the end of the fiscal year is that the level of intake in Liberian dollars has increased. This is also due to the fact that it has become necessary to increase the sale of the United States dollars to the Central Bank of Liberia to restore their reserves to the required targeted level as agreed with the International Monetary Fund,” the President wrote.
Meanwhile, the Legislature has approved the printing of L$55m to cover up for the “shortage of Liberia’s legal tender.”
The approval of the new money was owing to two letters from the President based on the advice of the CBL to address the shortage of Liberian dollars in circulation.
President Sirleaf said the shortage of Liberian dollars to meet national transaction needs would seriously affect the economy.
In spite of the shortage of Liberian dollars, the exchange rate of the US dollar to the Liberian dollar will not be increasing. The exchange rate is now US$1 to L$92.