CBL Blames Legislature for Liquidity Crunch

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— Says legislature’s action to deny CBL request to print L$7 billion is the cause

Amid difficulties in receiving cash from commercial banks in Liberia due to shortage, the Central Bank of Liberia (CBL) has shifted the blame on the Legislature for the country’s current liquidity crunch, which has forced banks to ration daily cash-withdrawals.

In a press release, the CBL said the current financial crisis could have been avoided if the Liberian Legislature had approved their request to print L$7 billion.

The denial of that request, the CBL said, forced them to settle for L$4 billion which is accordingly inadequate to replace the current amount of mutilated banknotes and, at the same time, meet the liquidity demand in the banking system.

“In its effort to preempt this seasonal pressure, the CBL in 2019 forecast L$7.5 billion based on its analysis but was authorized to print only L$4.0 billion. This amount which was brought into the country in July this year, was inadequate to replace the current amount of mutilated banknotes and, at the same time, meet the liquidity demand in the banking system,” the CBL said in their press release.

However, the CBL noted that in the midst of these constraints; they are strategically working and infusing the L$4.0 billion “through the commercial banks with substantial amounts already infused into circulation. 

The bank added that the pressure on the Liberian dollar this year is unusual and, as such, it can be attributed to the increased demand for “Liberian dollars over time, which has been exacerbated by COVID-19.”

Meanwhile, the CBL response comes just a day after the US government alerts its citizens and other foreign nationals that Liberia is gripping with acute shortages of its own currency and the US dollar; as such, they “they should travel with cash that will sustain them for their time in the country.”

“Travelers should be aware that it may be difficult to obtain cash from banks in Liberia and should plan accordingly.  Liberia’s banking sector has experienced a growing shortage of cash – both U.S. and Liberian dollars – over the last several months.  As a consequence, it is difficult to obtain adequate cash supplies from ATMs and banks,” the Embassy said.  

“There are no ATM facilities for public use at the U.S. Embassy. Amounts of U.S. dollars over $10,000 must be reported upon entry to Liberia.  Travelers may exit with no more than $7,500 U.S. dollars,” says the US Embassy Alert.”

The US government warning and the CBL statement comes as banks continue to experience a growing horde of people forming in queues just to get cash, which has been in short supply. Both the Liberian and US Dollars have been in short supply for months, but the squeeze has intensified in the last few weeks forcing banks to turn away customers as they simply don’t have enough cash in their vaults due to limited cash  received from the CBL.

Despite the positive African Development Bank outlook, the current liquidity crunch, which reminisces the same problem in 2018, means Liberians are in for a very rough incoming new year as the situation might persist for much longer than expected.

According to the AFDB, the Liberian economy was going to recovery by 1.6% in 2020, underpinned by mining, forestry, and agriculture with improvement in Macroeconomic stability due to the implementation of an IMF-supported program improving fiscal and monetary policies, which “tackles structural rigidities to create a favorable environment for private investment.”

However, such improvement might likely not be realized as the county is not just struggling to ensure cash flow but also finding it difficult to raise enough revenue to pay its wage bills and local debts. Currently, public sector workers have not taken pay for about three months and even if they were taking pay, they might not easily get hold of their salaries to pay bills and take care of needs.

With the situation increasingly worsening by the day, it has frustrated and turned away Liberians in their droves with no hope of making the festive Christmas season merrier. Breadwinners are competing with the demands of Christmas shopping for their kids as well as paying school fees for the next academic year.

And as the situation is increasingly worsening by the day, some observers of this trend have expressed fear that the anger of depositors could blow over sooner than later as public confidence in the banking sector continues to deteriorate.  

Thirst, anger and disappointment were visible on the faces of most bank customers on Tuesday, December 22, while others passed the long hours of waiting by playing games on their mobile phones, or engaging into political or social discussions just to help alleviate the stress of depositing or withdrawing their monies from the commercial banks.

The clients also vented their anger as they piled long queues in and around the buildings hosting commercial banks, resembling displaced persons standing in queue to receive rations.

But the CBL said they are working with all key stakeholders, both in the private and public sectors, to mitigate the liquidity pressure. Specifically, the Bank said it is currently engaging with commercial banks and mobile money operators to promote the use of mobile money and other electronic forms of payment in addition to withdrawal of cash.

“The CBL wants to reassure the public that it is doing everything necessary to ensure the availability of both US and Liberian dollar liquidity for the festive season. The Bank has also put into place a Liquidity Monitoring Framework, including the establishment of an Internal Liquidity Management Team to respond to the prevailing liquidity challenge.”

“In order for the Bank to be able to exercise full monetary authority, it will need full autonomy over the printing of currency like most other central banks across the world. The recent amendment of the CBL Act to give a three-year latitude to the Bank to print without frequent Legislative approvals is a positive step in the right direction,” the release added. 

The liquidity situation, which the CBL and the government are yet to find a solution to, has resulted in a blame game as senior government officials, including House Speaker Bhofal Chambers, blame business people for hoarding the Liberian banknotes and keeping them at home to cause the shortage that is adversely affecting the economy.

But the CBL statement is a winner for businesses who have been blamed for the government’s shortcomings to solve this problem since 2018. Meanwhile, Speaker Chambers and several other lawmakers have repeatedly given the greenlight to the CBL to print local currency while standing by and doing little or nothing to ensure that the bank solves the problem, which has now become a repeated occurrence.

9 COMMENTS

  1. Will the Liberian army please overthrow the Weah-led government, as you did to William R. Tolbert, to save Liberia of further embarrassment and shame? This singer of a president needs to be placed behind bars and put on trials for stealing and killing innocent Liberians.

    The Malian Army, one our of west African countries, overthrew their government few months ago and the world and ECOWAS complained, particularly Nigeria, fearing their own army might revert to the old coup making tactics—Malian army coup makers did not waver nor relent in their pursuit for change.

    They never allowed the so-called civilian government to come back to power, given the level of excesses meted against the people of Mali.

    Now, our army should do the same: Please overthrow these “bunch of filths” whose only purpose of seeking elected office is to steal and pillage the country’s resources. I implored our army to overthrow this government and create a new interim government that will lead us to fresh elections.

    I mean, a new government that will implement the war crime court in Liberia. I am tired of seeing the likes of Prince Johnson, Ellen Johnson-Sirleaf and all these bunch of murders passing around. WE NEED A COUP NOW, AND WHEN DO WE NEED IT? I SAY NOW!

    Liberian army, please act like men! Malians did it, you can, too…!

    • No, no, no, no, no, no . Not a good or great idea. The military is very very poorly trained, even in the military uniform code that they should know about and to practice. They are poorly positioned financially. In that they want the same thing that the corrupt politicians have-money and power. Infact, they are not qualified educational to know their principles objectives for overthrowing an elected civilian regime, so much so that the military will recalled most those corrupt civilians politicians back into service based on tribalism and nepotism. As it is, the two civilian regimes in their political performance struggled to get corruption under control by the rule of law. Struggled to get the economy going, and failed miserably under the rule of law and the justice system. Lately, the military has come under pressure about its draconian military views concerning the social justice system left to the courts. For the Senatorial and by-elections, the military Chief of Staff was requesting for special electoral funding for security purposes. Anticipating or hoping to cash in on the electoral related violence, Which Did Not Happened ! The elections were peaceful, and there was no need for the military to participate. Could they themselves stirred up political confusion and violence to make their military move ? No, no no no no no no no, it will cost the civilians more to get the military to take of their boots from off the necks of the civilians, than what it may cost the civilians to vote out a civilian regime through the ballot box. The suggestion is not a fair trade. It is a faceoff ! Not a trade off.

      • If the Liberian army is in the interest of the people, now is the time to do the right thing: “BRING THIS GOVERNMENT DOWN AND RESTORE SANITY IN THE COUNTRY.”

        The eve of the new year is good timing to stage a coup; when the president is thinking about having orgies with meretricious women, the army immediately steps in and put his behind, behind bars in post-stockade, BTC to await trials.

        Before the war-wary ECOWAS attempts to step in, it will already be late, like it was done in Mali.

  2. Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ! What an interesting public announcement by the US government through it Embassy to foreigners and US citizens wishing to travel to Liberia. That God Forsaken Country to travel with cash or other resources like money. Has the Embassy listed on its website concerning the crime rate that exists in that God Forsaken Country before advising their citizens to travel with cash on their persons ? What kind of public service announcement is that ? If that is not an invitation to be robbed upon touchdown. Well one solution to that problem is to advise them to learn the local vernacular or the local colloquial in order to blend in or fit in like the locals . But that by itself is no guarantee. Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ! But here comes the regime accusing Liberians for scaring away potential investors. Just when they themselves failed to do the right thing, and politically pointing their fingers at the wrong people and others. Asking travelers to travel with cash ? Are you Crazy ! Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha !

    • Who ever heard of the military asking for money during peace time to keep the electoral peace ? Shouldn’t the military be prepared and ready to keep the peace with or without money when called upon to do so ? Ready at anytime to perform and make the sacrifice ? So why was the Amy Chief of Staff requesting for electoral funding before duty ? They are just another bunch of greedy and corrupt politicians in military dress code or uniform. No, no, no, no, no, no, no, No trade off.

    • I was thinking the same thing about them walking around with cash.
      So I thought about this equation: walking around with loose cash + a poor security sector = recipe for disaster

  3. Why are the banks always out of money around the festive season?!
    For example, the Speaker blames businesspeople for holding the money at home or anywhere besides the banks, right? My question is: even if that is the case, what happened to the monies of those who made deposits, and how did a businessperson who took money out affect someone who should have money in the bank based on what he/she has deposited?
    We need someone from the commercial banks, NOT the CBL or GOL, to explain that to the citizens of this country, Some of us may have an idea of why it’s always happening, but I would like a commercial bank executive to explain, in detail, to the population. My guess is that they have loaned out the majority of our deposits and haven’t gotten the monies back.

  4. These people are blaming covid-19 again for a problem that started nearly two years before covid. What is important is that the top brags are taken care of.

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