President George Manneh Weah has committed his government to instituting a few stop-gap measures aimed at addressing the deteriorating state of the Liberian economy. Prime among these few is the infusion of US$25 million into the economy to help mop up excess liquidity of the Liberian dollar on the market.
While addressing the nation on the state of the economy yesterday, President Weah informed the nation that his government, through its Economic Management Team, is endeavoring to put together a team of “Liberia’s brightest” economic experts, both at home and abroad as well as international partners, and in close consultation with the Central Bank of Liberia (CBL) to work on series of monetary and fiscal measures that would help reverse the decline in the value of the Liberian dollar.
The Liberian economy is experiencing its worst decline, since the war years, and many are feeling the pinch as prices of basic commodities continue to escalate accompanied by a rapidly declining Liberian dollar against the US dollar. “I am fully aware of the negative impact of the declining exchange rate on the economic well-being of the Liberian people, and the serious hardship that this is beginning to cause,” Weah said.
“To lessen the immediate negative impact on our people, it will be an urgent imperative to devise and implement short-term fixes to the current problem — an immediate infusion by the CBL of US$25 million into the economy to mop up the excess liquidity of Liberian dollars,” he said.
In economic parlance, liquidity refers to how easily assets can be converted into cash. Assets like stocks and bonds are very liquid since they can be easily converted to cash. As part of an immediate term strategy to resuscitate the economy, Pres. Weah said there would be an aggressive enforcement of existing monetary policy.
“It is clear that our monetary policy regime over the past several years has been too lax,” he said, adding: “In fact, it could well be said that we do not have the capability to exert effective control over our monetary policy, since more than 90 percent of the money supply is held out of the banking system.” Towards this end, the President promised to mandate authorities of the CBL to provide more effective supervision and regulation of money-changers or foreign exchange bureaus.
The President blamed the deteriorating state of the economy on the slump in prices of traditional export commodities and the drawdown of the United Nations Mission in Liberia (UNMIL), which he said contributed significantly to the economic decline.
“While the fall in the prices of our traditional exports and the UNMIL drawdown have contributed significantly to this situation, we believe a stronger and more aggressive enforcement of monetary policy, along with the relevant fiscal instruments, should go a long way to partly address the problem,” he said.
The President also blamed trade wars between the major manufacturing countries as exerting more pressure on the prices of Liberia’s major exports.
He spoke of the need to ensure domestic competitiveness and the existence of a strong private sector that would be oriented towards domestic consumption, import substitution and export.
“This is a goal we seek to achieve in the Pro-poor Agenda for Prosperity and Development,” he told an expectant nation hoping for a reduction in the exchange rate. Stressing that many of the current problems his government faces were inherited, including a weak underperforming economy facing solvency and liquidity challenges, President Weah said, “Our currency was experiencing rapid and unprecedented depreciation, contributing to rising inflation. Unemployment was very high, and our foreign reserves were at an all-time low.”
The President however said that this is not time to complain or to cast blame upon previous administrations, “rather, ours is a duty and responsibility to find new and sustainable solutions to these age-old problems that have stubbornly defied solutions in the past. We were very aware of these systemic problems when we decided to run for the Presidency, and so we are not surprised.”
As a first step in resuscitating the economy, the Weah-led government has placed emphasis and urgency on the formulation of a comprehensive development strategy, Pro-poor Agenda for Prosperity and Development, which will be supported by a strategic implementation plan.
The strategy, he said, is nearing completion, and will very shortly be presented to all stakeholders, including the country’s foreign development partners, the private sector, and the general public, for consultation, input, and buy-in, before being finalized into a strategic implementation plan.
“This development strategy and implementation plan will serve as a road-map for the urgent and important next-steps to be taken in giving direction to our economic recovery, and will consist of short-term interventions, medium-term reforms, and long-term restructuring of the Liberian economy,” he noted.
The President however admonished Liberians to be patient as finding lasting solutions to the present macroeconomic challenges will take some time, because nothing less than the structural transformation of the Liberian economy will produce sustainable recovery and growth.
“The key to success in this endeavor is for Liberians to produce more goods and services locally, so that we reduce our importation of goods and services from abroad, whilst at the same time increasing our exports and adding value to the raw materials that we ship to the world,” he said.