The Liberia Business Association (LIBA) has rejected the proposition for the eradication of dual currency in Liberia, arguing that the country does not have the productive capacity to institute a single currency regime.
LIBA said the international financial system would not have confidence in the country’s single currency owing to the country’s low economic output, coming from conflict and being characterized by mismanagement of its economy over the decades.
The Secretary General of LIBA, Ms. Leelai M. Kpukuyou, gave her expert opinion to lawmakers yesterday in Ganta, Nimba County, during a five-day retreat on the Proposed Amendments to the 1986 Constitution of Liberia.
Ms. Kpukuyou said though timing is important, LIBA believes that the House of Representatives should delay moving toward a single currency in the immediate future until productive capacities are greatly improved.
“Until we add value to our own currency through Liberian businesses we cannot have a single currency,” Ms. Kpukuyou said. “We need to take our economy from the hands of foreigners, formalize the informal business sector, then we are ready for a single currency.”
She pointed out that despite the high rate of exchange – L$88 to US$1 – Liberia’s economic recovery is in fact still being supported by the use of the dual currency system.
She said recent statistics from the Central Bank of Liberia (CBL) indicate that more than 70% of broad money (M1 and M2) is denominated in US dollars.
“Accordingly, the use of the dual currency regime has been a blessing for Liberia’s economic recovery,” Ms. Kpukuyou said.
“While Liberia has officially sanctioned the use of the United States dollar as legal tender, it is not the only country in the world with high dollarization. Other countries, such as Ecuador, El Salvador, Panama and Timor Leste have higher proportions of foreign currency deposits to broad money.”
The strength of any country’s currency depends on productivity for local consumptions and for export, which will allow the country to maintain a considerable balance, according to Kpukuyou .
During the formal opening program, the Presiding Chairman on the House Joint Committee on Good Governance, Elections and Inauguration and Judiciary and the Chairman on the Constitutional Review Committee (CRC) gave an overview of the retreat.