Central Bank Reports: US$222 Deficit in 2018; for 2019, $42 Surplus. Wow!


By J. Yanqui Zaza

How did the Central Bank of Liberia (CBL) leapt from US $222M deficit in 2018 to a US $42 surplus in 2019? See page # 51 of the 2019 CBL Annual Report). Did officials generate the surplus by cutting social programs in 2019? Or did Officials siphon revenue in 2018, hence, the deficit? For whatever reason, CBL quickly removed the 2018 Annual Report from public view without explanation, and the revised 2018 Annual Report did not carry any information on government revenue.

What is the Central Bank of Liberia (CBL)? It is the custodian of all monies and gold deposits of the Republic of Liberia. It is responsible for managing the monetary policies of the country and provides collateral for the government and financial institutions. Its activities must be transparent, professional, and must avoid deception since businesses and third parties rely on its report to invest, plan, and grow. It also prepares reports which cover the National Government’s activities, including revenue, expenditure, deficit, surplus, debt, productivity, growth, interest rate, profitability of banks, Liberia’s net international foreign exchange reserves, loan portfolios, etc.

While CBL is responsible to keep government revenue, Ministry of Finance Development and Planning (MDFP) and the Liberian Revenue Authority (LRA) play a role in collecting the revenue. MDFP stated that revenue was low, while LRA stated that it collected more revenue than projected. MDFP postponed salary payments for months and cut funding for hospital, clinics, education, etc. because it claimed that Liberia had no money. In fact, on many occasions, Finance Officials indirectly questioned LRA’s claim that it collected more revenue.

The US$42M surplus in 2019 prompted me to review the CBL 2019 Annual Reports just in case it was removed from public view.

Reviewing the Annual Report will help me to find out if CBL repeated misinformation the government gave the public about the revenue amount. Well, unfortunately, even Wall Street chief executives sometimes use deception to achieve positive outcomes. Evidence suggests that Finance officials, trying to implement austerity measures, deliberately and deceptively, gave false information about financial matters.

Did CBL follow the government’s line by reporting numbers that were not supported by the facts?

As Liberians we should hope that CBL is not only a non-partisan entity, but it plays a critical role of linking the private economy to the public economy.

So, let us review CBL 2019 Annual Report, dated 1/27/2020.

Global Prices: At the beginning of the report CBL does not suggest that Liberia had US $42M surplus. The Bank stated that, “In 2019, the Liberian economy experienced several challenges, partly emanating from global economic dynamics…”

However, what facts are there to support the assertion that Liberia’s economic challenges emanated from global prices? The unit of Iron ore increased to $92 in 2019 from $69 in 2018; the ounce of gold began increasing from $1,269 in December 2017 to $1,390 in 2019. These were two of the three major commodities that Liberia exported in 2017, 2018, and 2019 as per page # 23 of the 2019 Central Bank of Liberia Annual Report.

Moreover, even if global prices of Liberia’s major commodities had declined, the taxes are arranged by multinational corporations. So, what that means is that tax revenue emitted to the government does not fluctuate based on global prices.

Depreciation of the Liberian dollars: Again, did CBL stay above the game of deception? Let us visit the last sentence of of paragraph # 2 on page # 6. CBL stated that “The Liberian dollar depreciated against the US dollar…induced by low foreign exchange inflows.” Also, on page # 48, CBL also stated that “The depreciation of the Liberian dollar was primarily triggered by the high trade deficit.”

What contributed to the depreciation of the Liberian dollar? Was it “…low foreign exchange inflows,” or excess Liberian dollars on the market?

President George Weah publicly announced that the excess Liberian dollars was the primary reason for the depreciation. In fact, he authorized CBL to use US $25M to buy back excess Liberian dollars. It seems that CBL wants to blame foreign exchange inflows, which has always being low, in an effort to save the government from shame.

Liquidity Squeeze: Once again, did CBL stay above the game of deception? Let us visit the last sentence of the last paragraph of page # 1. CBL stated that “The banking system was further constrained by Liberian dollar liquidity squeeze…”

Wait a minute, why complain about cash shortage when CBL reported US $42M surplus? In addition, President Weah stated on January 22, 2020 that the government received US $445M in revenue and received a loan proceed of US $213M, which would have increased the cash position of the government. (See President Weah Third State of the Nation Speech).

Further, let us visit the CBL’s Annual Report. CBL 2019 Annual Report, on page #36, stated that “Currency outside the Banks” was L15B in 2017; L18B in 2018; and L20B at November 2019. So, contrary to the assertion that there was no money, the Total Money Supply, which included currency outside the bank, was L50.5B in 2017; L67B in 2018; and L76B in 2019.

Based on the discrepancies it seems clear that CBL on paper, a non-partisan organization, is in fact promoting a narrative that absolves the Liberian Government of any wrong doing. It is much easier to cut social programs when you can blame outside forces such as global commodities prices and low foreign exchange inflows. However, a closer review of the numbers suggests that the CBL is hiding the true cost of the cut in social programs. The true cost is the inhumane insistence that government surpluses are better than a fair Liberian economy.


Iron Ore Web Site

Gold Web Site

Central Bank of Liberia 2019 Annual Report

Central Bank of Liberia 2018 Annual Report

CBL Financial statistics 2019

CBL Financial Statistics 2018

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