Amid the harsh economic condition under the George Weah administration where even bank customers hardly receive money credited to their accounts, the political leader of the opposition Movement for Progressive Change (MPC), Simeon Freeman, has proffered new ideas to assist the administration to resuscitate the country’s economy.
Mr. Freeman made the suggestions on Friday, January 29, 2021, at a news conference in Monrovia while responding to President Weah’s State of the Nation Address delivered on January 25. The address by the President has been heavily criticized by the opposition bloc and a lot of citizens, describing what the President counted as progress as total fallacies.
Mr. Freeman said there’s a need for President Weah to constitute an economic management team with a clear term of reference, including reviewing Liberia’s current expenditure and object of expenditure to expand the domestic resource mobilization capacity, and to invest heavily in the creation of import substitution.
Additionally, Mr. Freeman called for reviewing of the current education focus for Liberia to redesign a mechanism that enables technical expertise from the counties to the capital, recapitalize the Central Bank of Liberia (CBL), review operational expertise, enable banking confidence and rebuild the economy using mobile money as the informal sector tool.
According to him, the team must deliver its recommendations in 20 days and must consist of professionals from all political backgrounds, noting, “We must learn to work with people who did not support us for the good of Liberia.”
The MPC political leader whose critique of the Weah Administration has been softer as compared to the Ellen Johnson Sirleaf Administration said Liberian people will continue to experience hardship because of large poor economic management situation while encouraging the President to the change code. People barely exist and it must be arrested.
Mr. Freeman said Liberia is heavily relying on the importation of basic food supply which is exposing the country to the least external shocks.
He said the extremely low banking system undermines investors’ confidence and the CDC government is yet to take steps to repair this action.
According to him, relying on extractive industries for economic growth has hindered Liberia’s competitiveness. He also indicated that Liberia’s education sector is academically based with little technical expertise for the creation of capacities required to foster economic growth.
“During the tenure of the late Samuel K. Doe, Liberia created a dual currency regime with the hope that the then National Bank would have a better monetary policy framework. Years later, the framework was never realized. Former Interim President Dr. Amos C. Sawyer introduced the current Liberty legacy banknotes to have a better monetary framework but witnessed the collapse of several banks in the 90s,” Mr. Freeman said.
Mr. Freeman further lauded President Weah for initiating or commencing the repayment of domestic debts which is good for borrowing and also good for the growing domestic economy, urging the President to spend the recent US$48 million dollars acquired from the IMF to repay commercial banks unconditionally.
Accordingly, Mr. Freeman indicated that special attention needs to be given to the Liberian Bank for Development and Investment (LBDI) because it is the only surviving Liberian bank of Liberia’s nine banks and the country’s only development bank.
“The CBL is heavily undercapitalized and action must be taken by the CDC-led government to capitalize the CBL and tin its operations expenditure to avoid a total dissipation of confidence in the banking sector. Should our suggestions be ignored, we may, unfortunately, witness the closure of some commercial banks in the not too distant future,” Mr. Freeman said.
Mr. Freeman said he is prepared to avail his services to assist the tinning of CBL’s operational expenses and recapitalization of the CBL whilst simultaneously building confidence in the commercial banking sector of Liberia.
Mr. Freeman expressed gratitude to President Weah and his government for retaining the expenditure within boundaries of the US$518 million budget and the swift budget recast action to avoid budgetary shortfall.
“We think this is commendable; however, we also take note of the positive comments of the International Monetary Fund (IMF) about the improved fiscal space and thank the fiscal monetary team for this recognition by the IMF,” Mr. Freeman said.
He said those comments ignored the largest low banking confidence that requires enhanced monetary restructuring to repair the huge trade deficits, high unemployment and underemployment, and the low GDP growth which requires better fiscal and monitoring actions to change the current trends.
“The CBL has currently constituted very autonomous and independent structure; however, its underperformance is not caused by lack of additional autonomy but abuse of authority. The largest contributor to the current low confidence in the banking system is the CBL. The CBL owes commercial banks about US$60 million dollars which came from the previous administration and treasure instruments were issued with the hope that it will be redeemed by the AfrisenBank, but in the end as a result of the commitment to liquidate and owed liabilities, commercial banks committed themselves to fund government programs inclusive of the roads that are currently being constructed and some of which are being completed led to another US$25 million infusions into government projects,” he said.
Mr. Freeman said “Today, the current stock of CBL and government debt to commercial banks stand at about US$103 million dollars.”
“If the custodians of public funds deposited in banks misapplied commercial banks’ reserves, that custodian needs significant restructuring and not additional authority. The Kroll report highlights the lack of automation and ethnical approach deficit at the CBL,” Mr. Freeman said.
According to him, Liberian US$16 billion was infused in the economy from 2016 July to 2018 December without a shred of evidence that such infusion was done through commercial banks as required by law.
“If the CBL is the biggest violator of the very Act that created the institution, we must proceed cautiously for granting additional autonomy. We urge the chairman of the committee on banking and finance at the both Houses of the Legislature to do the following including the engage with United States Agency for International Development (USAID) to finance a forensic audit of the CBL, establish how printed monies are infused into the economy by evaluating how US$16 billion and US$4 billion were infused into the economy, advise the CBL on details automation process and setting up of local Liberian dollars printing mechanism to be outsourced with the requisite responsibility definitions, review the human resource requirements of the CBL versus the task of the CBL, which means that number of persons working there and the things they have to do,” he said.
“We are again happy to hear the efforts made to recognize and consolidate total domestic debts stock and the discovery of the additional US$170.63 million government of Liberia debts to the CBL that was not recognized by the previous administration. Yet, your administration also added additional debts already threatened situation,” Mr. Freeman said.
According to him, enlisted facts of 2019 speak for itself, “total debts stock as of December 2018 was at US$878.2 million of which the total domestic debts to financial institutions was US$261.6 million, while the total extended debts owed multilateral and bilateral institutions was US$612 million.
Mr. Freeman also indicated that the total public debt as of December 2018 was US$1039.9 billion of which total domestic debt was US$265 million and total extended debt was US$774.9 million up from US$612 million from the previous year and it shows additional borrowing on the extended front.
He said this represents the borrowing of US$162.9 million, stating “looking at the President speech delivered on January 27, 2020, Weah indicated that IMF committed to giving Liberia US$213.3 million of which US$23 million has been provided to the government.”
Mr. Freeman called on President Weah to enact a legislative instrument to cancel the US$500 million Elton agreement unsuccessful borrowing attempt to avoid unanticipated occurrences to the Coalition for Democratic Change (CDC) government or a future government Since the US$500 million was never acquired and it was a law that was passed.
Mr. Freeman said the total public debts by December 2019 was US$248.3 billion while domestic debts rose to US$421.1 million and of this amount, US$368.1 is owed to financial institutions which means there is a rise of US$103.2 million dollars in debt to financial institutions.
“Our total extended debts as of 2019 rose up to US$827.2 million which is a rise of US$52.3 million from 2018. It’s therefore clear that government principle means of financing long-term infrastructure is through debts. Massive acquisition of debts has long-term disastrous consequences for the future of our country and I urge President Weah to stop the massive acquisition of debts and also urge the Legislature not to enact any debt instrument,” Mr. Freeman said.
He called on the committees of both Houses, on ways, means and finance to work with the Executive financial management team to develop new and creative ways of mobilizing domestic revenue and manage domestic expenses.