President George Weah has been seriously cautioned against using ‘impossible’ statement in his attempt to instill integrity and independence of the Central Bank of Liberia (CBL), as well as greater confidence in the banking sector at large, which might lead to the shutdown of the government.
The House Acting Chairman on Banking and Currency, Representative Hanson Kiazolu, said, “The President should not stop the CBL from extending its short-term liquidity facility to the government, with this emerging and fragile economy, especially wherein the case the revenue strains are not flowing to pay the governmental expenditures, obligations and vendors.”
The Montserrado County District #17 Lawmaker’s advice follows President Weah’s Wednesday, May 29, 2019 address to the nation, in which he said the government will no longer borrow from the CBL for its short-term liquidity needs.
Rep. Kiazolu, who served as Comptroller General from 2015–2017 at that time in charge of receiving all public monies payable into the consolidated fund, said he provided secure custody for these monies, and makes disbursements on behalf of the government in accordance.
He told the Daily Observer yesterday in his Capitol Building office that he welcomed the independence and reconstruction of the CBL, but said the President statement of not borrowing from the CBL is an “unmanageable assertion, and the President should have never said so in his public address.”
Kiazolu is an independent lawmaker and a member of the Independent Legislative Caucus.
He said the need for short-term liquidity from the national bank, the President should not have said publicly, “he will no longer borrow from the CBL for its short-term liquidity needs to make it a policy statement.”
“I want to use this time to caution the President that his assertion was wrong on monetary policy. If you insist on not borrowing from the CBL for short term liquidity needs, it would cause the government to shut down if you don’t raise the needed revenues to pay your employees, vendors’ debts and obligations,” Rep. Kiazolu said.
Among other things, the President sadly informed Liberians that he is fully aware of the negative impact of the declining exchange rate on the economic well-being of the Liberian people, “and I know that this is causing serious hardship for everyone, but most especially, for the ordinary Liberians, who have no financial cushion to protect them from these harsh conditions.”
In order to slow down or halt the depreciation of the Liberian dollar, and thereby bring some much-needed relief to the suffering the Liberian people, the President said he was advised by his Economic Management Team in close collaboration with the CBL to infuse $25 million into the economy, through the Central Bank; the purpose being to mop-up the excess liquidity of Liberian dollars.
“At the completion of the mop-up exercise, criticisms and allegations were made, that the process had not been done in a proper and professional manner, and that there had been irregularities and issues of mis-management,” the President said.
He noted, “These issues were referred by me to the Minister of Justice and Attorney -General for further investigation. He thereupon referred the matter to the General Auditing Commission (GAC). Upon completion of its investigation, the GAC has reported its findings to the Minister of Justice, who has recently announced these findings to the general public.”
The President said the investigative report found that, of the US$25 million authorized to be used for the mop-up, only US$17 million was used, and that this was exchanged for an equivalent of L$2.6 billion Liberian dollars. He said the GAC report also provides accounting evidence that the amount of L$2.6 billion Liberian dollars was deposited into the Central Bank.
“However, major concerns were raised surrounding several CBL-listed businesses that are denying participating in the mop-up exercise, as well as other CBL-listed businesses that were found not to be in existence at the time of the GAC audit.”
The President added, “The report also found major discrepancies and unexplained variances in the accounting records of the CBL. The Minister of Justice has now requested the Liberia Anti-Corruption Commission (LACC) to investigate these irregularities. The aim of this exercise is to determine criminal liability, and that all those found criminally liable will face the full weight of the law.”
CBL leadership reconstituted
The President noted that all the these reports and lapses point to a major lack of systems and controls at the CBL, and called into question, the ability of its present leadership to effectively revamp its internal mechanisms to provide greater accountability and professionalism, so that confidence and credibility would be restored to the institution.
“To provide the opportunity for the Central Bank to have a new direction, I have accepted the resignation of the Deputy Governor for Economic Policy, who is scheduled for age-related mandatory retirement in the next three months. During that period, we will work to transition the bank to a new management. The new CBL leadership will be recruited by a vetting committee to be established,” the President said.
“It will be composed of an independent team of professional Liberians to be named shortly. Any qualified Liberian interested in becoming a part of this new leadership team may submit applications to the vetting committee, whether they are resident in Liberia or abroad, and regardless of gender or political affiliation.
Meanwhile, I will also announce a new Board of Governors next week.”