-CBL Executive Governor-Designate Tells Senate
The Executive Governor-designate of the Central Bank of Liberia (CBL) has emphasized the need to review the country’s current economic strategy in terms of reducing reliance on the enclave sector and move onwards towards the agriculture manufacturing sector.
Mr. Nathaniel Patray made the statement over the weekend when he appeared for confirmation before the Senate Committee on Ways, Means and Finance at the Capitol Building.
“If we should achieve a sustainable growth and ensure a sustainable improvement and development of our economy, we will need to review our current economic strategy in terms of reducing our reliance on the enclave sector, and move onward towards the agriculture manufacturing sector,” Patray, an economist and banker, told the committee.
He added that in order to create more jobs for our people, “this I know is cardinal to the national development plan, which will be launched by President George Weah shortly.”
Mr. Patray said the anticipated recovery in growth remains far lower than the country’s pre-crisis economic growth rate of 7.5 percent and slightly lower than both sub-Saharan Africa and global growth rate of 3.4 percent and 3.9 percent.
At the end of May this year, Mr. Patray recalled that headlines in inflation stood at 21.3 percent, compared to 13.2 percent a year ago, as the Liberian dollar recorded 4.1 percent depreciation against the United States dollar during the same period, which he said has culminated in welfare loss, reduction in the purchasing power of most Liberians, especially the poor.
“Therefore, when confirmed, we at the CBL will embark on the use of a mix of available monetary policy instruments to first and foremost ensure broad exchange rate stability, low and stable inflation in the Liberian economy,” Patray, who is expected to be confirmed Tuesday, assured.
“While it is true that the prevailing economic fundamentals are unfavorable, I believe a combination of various policy measures and tools from both the fiscal and monetary sides can help reverse the growing exchange rate depreciation and inflationary pressure, and put our economy back on the path of growth and stable inflation,” Mr. Patray maintained.
This is why, he said, the technical economic management team (TEMT) was recently constituted by President Weah, to examine prevailing micro-economic issues, challenges and come out with policy options for economic recovery.
He said the TEMT team has been working for weeks on major short-term measures to help resuscitate the economy with the following key issues: the sustained decline of the Liberian dollar, which has continued for years through double digit rates of depreciation; and high level inflation, which persists and remains in sight largely on the back of continued depreciation of the Liberian dollar.
The policy objective of the TEMT is to take immediate action, to ensure broad exchange rate stability and price stability (meaning low and stable inflation). Under the proposed policy measure, Mr. Patray said the economic team will meet and agree on a number of monetary and fiscal policy measures to be implemented in July, 2018.
Mr. Patray added that the policy options, which are two-fold, include the short-term to resuscitate the economy, and medium term measures to revamp and sustain economic recovery.
Under the short-term measures for 2018, he said that the economic team has directed the CBL to issue directives to commercial banks to stop the payment of all Liberian dollars legacy note; the old notes to the public to help withdraw the legacy notes; reduce the volume of legacy notes in circulation and control counterfeiting; that the CBL carries out foreign exchange auction exercise in the amount of US$25 million to help meet the demands of the foreign exchange market; minimize the high level of volatility in the foreign exchange market and ensure broad stability in the exchange rate.
Also, he disclosed that the CBL has been directed to issue a regulation on currency holding, to help reduce currency outside banks, ensure greater control of the currency in the economy and encourage broad exchange rate stability; that CBL in collaboration with the relevant stakeholders, the Liberia National Police (LNP), Monrovia City Corporation (MCC) and Paynesville City Corporation (PCC), heighten and sustain its enforcement and monitoring exercises to help weed out unlicensed operators, minimize speculations, and control or eradicate quotation of rates and bring order and sanity in the foreign exchange market.