No Serious Impact on Revenue as LRD Appreciates 

The Ministry of Finance and Development Planning has disclosed a plan to introduce mitigating measures to minimize the negative economic impact arising from the appreciation of the country’s currency (LRD) against the US dollar.

The ministry plan, which was disclosed by Samora Wolokolie, Deputy Minister for Fiscal Affairs, was intended to brief Senators about the economic impact of the unprecedented appreciation of the Liberian dollar against the US dollar.

 “We at the Ministry are keenly observing the trend of the exchange rate situation and are planning on introducing mitigating measures that would minimize any negative impact that may result therefrom,” he said. “Key among those measures would include the review of the ratio of currency split in terms of government payments, adherence to the exchange rate as published by the CBL, the pricing of goods and services in both LRD and USD using the CBL exchange rate, among others.”

He added that as a dual currency economy when one currency appreciates or depreciates against the other, “there will obviously be some fiscal impact that would require the robust intervention of the Ministry of Finance in collaboration with other actors of the economic management team.”

 Wolokollie made the disclosure when he proxied for his boss, Samuel Tweah yesterday at the Senate to provide updates from the Economy Management Team (EMT).

According to him, the ministry is ready to take whatever remedial action may be necessary to maintain confidence in the fiscal and monetary environments.

Deputy Minister Wolokolie then intimated that, except for external payments which are denominated in USD, all domestic payments are subjected to the 80/20 ratio - which is 80% USD and 20% LRD.

However, he disclosed that if the Liberian Dollar continues to appreciate against the USD in the long term, the MFDP, in collaboration with other members of the EMT, will have to introduce corrective fiscal measures to mainly protect the disposable income of those receiving salaries and other payments from the government.”

For now, Wolokollie said, the appreciation of the Liberian Dollar against the USD, which is temporary, will not have any major impact on the collection of revenue in the short term as historical data over the last two years have shown that revenues are mostly collected in USD in the range of approximately 16-20% in Liberian Dollars and 84 - 80% in USD.

“If the appreciation of the Liberian Dollar continues in the short term, ( two to three months), the impact on both the revenue and expenditure side of the fiscal field would be less consequential,” he said. “In taking any of these actions, the Ministry of Finance in particular, and the EMT in general, would do so in consultation with the National Legislature. Ours is to ensure micro-economic stability, while at the same time ensuring that the overall wellbeing of the citizens and residents remains paramount.”

As at the date of yesterday’s hearing, Wolokolie disclosed that the Central Bank of Liberia’s published rate, the rate that is used for the government financial transactions, is US$1 to L$145, representing a precipitous change during the period of the last two months when the rate was hovering at US$1 to L$170.

In a precedent letter of excuse for failing to appear for some important Senate citations, Minister Tweah, in a communication, told Senate plenary that he was in Glasgow, Scotland as a member of President George Manneh Weah’s high-powered delegation to the Climate Change conference (COP26).

Wolokolie’s presentation meanwhile, was sent to the Senate Committee on Commerce, Public Corporations and State Enterprises to report to plenary in two weeks.