By Togba-Nah Tipoteh
Under the immediate past governance of the Central Bank of Liberia (CBL), it was reported that an amount of LD1.7 billion was in circulation and an amount of LD15.2 billion was out of circulation (out of the commercial banks). Under the current governance of the CBL, it is reported that an amount of LD2 billion is in circulation and an amount of LD20 billion is out of circulation (out of the commercial banks). On account of the fact that an enormous amount of LD is outside of the commercial banks, the banks can not give out large amounts of money or any amount of money when they have no money. There is not enough LD in circulation because depositors do not have the confidence that they can get their deposits whenever they want to withdraw from the banks. So, the depositors proceed to hoarding their money. The depositors with the largest amounts of money are foreigners, with those in the commercial sector alone making at least USD50 million monthly doing and owning where Liberians should be doing and owning according to the Constitution Liberia.
Whenever the cash of any currency in circulation is high relative to the cash of another currency in circulation, the rate of the currency relative to the other currency goes up and this is why the LD:USD rate went high up from LD130:USD1 in September 2019 to LD215:USD1 in October 2020. But whenever the cash of any currency in circulation is low relative to the cash of the other currency in circulation, the rate of the currency relative to the other currency falls down and this is why the LD:USD rate has fallen from LD215:USD1 to 160:USD1. The fall in the rate is seen in the inability of the banks to give out large amounts of money or any money at all, in some cases, as the long lines continue with people waiting all day and not getting money from the banks at times. Such a situation is at once promotive of corruption and violence. as insiders do favors for money and vexation becomes the order of the day for most of those people waiting long hours to get some money, even when they have legitimate checks to be cashed.
Like any other problem, the foregoing problem can be solved provided the State decision-makers can get the Will to make the right decisions. The right decisions have to do with getting enough money into circulation, into the banks. This can be done by cutting drastically the luxurious State spending, like for non-salary items, of elected and appointed government officials and place the savings in the CBL to be made available to the commercial banks so that confidence in the banks can be restored immediately. Grants received should be placed as well in the CBL for them to be made available to the banks.
For the post-immediate solution to the confidence problem, the State decision-makers have to get the Will to depart from the colonial poverty generating system of the production of raw materials for export and bring in the poverty alleviating system of the production of raw materials with value addition to develop the manufacturing sector in Liberia for Liberians to be producing what they consume. This poverty alleviation system will get Liberians to do and own constitutionally what foreigners are doing and owning, making USD50 million monthly, in the commercial sector alone. Furthermore, the CBL should be instructed to deal only with commercial banks that give at least 75 per cent of their loans to Liberians to do profit-making business. As the manufacturing sector grows, employment of Liberians will be boosted and poverty will be decreasing sustainably. The solution to the foregoing problems means that as Liberians board a ship headed for the land of Justice for All, the indispensable ingredient for genuine peace, there will be calm winds to move the ship forward to sustained improvements in living standards, especially of the poor, and the people will be boarding the ship confidently rather than hoarding the money. Boarding Not Hoarding is the Way Forward For The Better!