— US Embassy warns traveling Americans to have enough cash on them when visiting Liberia
The United States government has alerted its citizens traveling to Liberia to come with hard cash due to the country’s worsening economic situation that has forced banks to ration daily cash-withdrawals.
In a statement, Uncle Sam, through its Monrovia Embassy warned Americans and others foreign nations intending to visit Liberia that the county is facing an acute shortage of local and foreign currencies; as such, they “they should travel with cash that will sustain them for their time in the country.”
“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. There are no ATM facilities for public use at the U.S. Embassy,” it said.
The US government warning 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 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.
Despite the positive African Development Bank outlook, the current liquidity crunch, which reminisces the same problem in 2018, means Liberians are in for 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.
Even though there has been a significant drop in the exchange rate from L$199 to as low as L$150 for US$1, there seems to be no effect on the prices of basic commodities as citizens struggle to foot their bills. It has frustrated and turned Liberians away in their droves with no hope of making the festive Christmas season merrier. Breadwinners are competing demands of Christmas shopping for their kids as well as paying school fees for the next academic year.
Continuing, the US Embassy informs all travelers that envision to visit the country to come with the amounts of US$10,000 and should be prepared to pay expenses such as hotels and flights by credit or debit card when possible.
“Check with vendors to ensure credit or debit cards are accepted,” the US Embassy said. It added that upon entry to Liberia, travelers should report the US$10,000 they have and “may exit with no more than US$7,500.00.”
According to the embassy, it has received reports of financial information being compromised even at hotels where credit cards are routinely accepted. As a result, travelers must “bring cash sufficient for the duration of your trip and avoid displaying or carrying unnecessary valuables and large sums of money.”
In response to US government notice, youth activist Kimmie Weeks, described the situation as ridiculous while urging the Central Bank of Liberia, the monetary policy architect of the country, to make urgent interventions to resolve this matter.
Before the US government notice, local banks and businesses have been trying to manage the shortage of local Liberian dollars since last month as the commerce ministry warned the latter that they must accept both Liberian and US dollars or face large fines. The ministry’s warning last month came when several businesses became rejecting the United States dollar previously in demand due to the sudden dropped in the exchange rate.
“I have been here for the last four days, the bank keeps saying their system is down because there are no Liberian dollars in the bank,” said Martha Kollie, head of a local saving club. Like Martha, several customers in Downtown Monrovia continue to walk past ATM machines and demanded to enter the main banking hall because the machines do not have cash.
The 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.
As for bank officials, the situation is the result of a lack of public trust in the banking sector due to the 2018 liquidity crunch crisis which led to a surge in the withdrawal of Liberian dollars from commercial banks early this year.
“Deposits are no longer coming in but only withdrawals,” a top staff at a multinational bank operating in Liberia told this reporter. But the CBL Governor, Aloysius Tarlue, at a meeting with Legislators in November, attributed the liquidity crisis to COVID-19 impacts on the country and the economy.
Governor Tarlue informed the lawmakers that the CBL was supplying commercial banks with more liquidity, but that would be on a gradual basis, so that low inflation volatility aimed at protecting the purchasing power of ordinary citizens could be maintained.
“We had requested the printing of 7.5 billion Liberian dollars in 2019, but the Legislature only approved four billion at the time. This means with increasing demand, the need now for the printing of more liquidity cannot be overemphasized,” Tarlue said.
Since 2016, the government has printed over 20 billion Liberian dollars, but questions continue to hover over the whereabouts of the printed banknotes.
However, there are reports that Legislative approval has been given the CBL to go ahead with the printing of new sets of banknotes to replace the current currency in circulation. This information is yet to be verified independently.