Is the Central Bank of Liberia broke? And is it so broke to the extent that public financial instruments held by individuals and institutions are purportedly being reportedly downgraded, is the million dollar question lingering on the kinds of the public.
The answer is yes, according to a Liberian financial expert Yanqui Zaza who made the disclosure at a Governance Commission one-day policy forum on the state of the Liberian economy held over the weekend at the Lutheran compound in Sinkor.
Mr. Zaza disclosed that the Government of Liberia (GOL) in 2016 owed commercial banks a total of US$ 42,435,165. He explained that an analysis of commercial banks’ loan portfolios shows that three sectors of the economy accounts for the stated amount remained outstanding at the close of the fiscal period. Those sectors, according to him are a) Trade; b) Construction and c) Services, while Manufacturing accounted for a mere 5 percent of the total.
He furthered that GOL’s over-reliance on what he calls User taxes which include Excise, Value added, Payroll, Income, Real Estate, Property, Sales and other related taxes to finance its budget is unsustainable because such a practice usually leads to the accumulation of huge debts borrowed from international financial institutions such as the World Bank and IMF.
Earlier, the President of the Liberian Bank for Development and Investment (LBDI) John Davies, from whom Mr. Zaza apparently took his cue, had disclosed during his presentation that the severity of this problem has created a situation wherein commercial banks have developed a tendency to display a rather knee-jerk reaction-NEXT- to those presenting GOL contracts and obligations as collateral for lending assistance.
Given the growing public outcry against rising economic difficulties induced by the current liquidity crisis and given the importance that the Daily Observer attaches to this matter, several attempts made over the past few weeks to contact the Central Bank Governor or any of his functionaries for comment proved futile until late Sunday evening when this newspaper finally succeed in establishing contact with Mr. Cyrus Badio, Public Relations Manager at the Central Bank.
When asked for comment on Mr. Zaza’s averments that the Central Bank of Liberia at the close of fiscal year 2016 owed commercial banks to the tone of US$42,435,165, Mr. Badio replied that he could not comment since such information was not availed to him, however promised to contact the relevant individuals clothed with the authority to speak on such matters. He did not say when, although requested the Daily Observer to hold on to its story until he had done so.
Meanwhile the Daily Observer has confirmed its readiness to publish the Central Bank’s comments in reaction to Mr. Zaza’s comments.