Count The Banknotes and Reform our Economy (PART II)

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Disclose Liberia revenue and bank balances of State-Owned Entities

By J. Yanquoi Zaza

Disclose bank balances of state-owned entities

President George Weah government should not only count Liberian currency and investigate large withdrawals of banknotes in 2018 and 2019. Also, his Administration should disclose cash balances of state-owned entities (LEC, NPA, LPRC, NASSCORP, Maritime, etc. For example, his government should verify why cash balance owned by state-owned entities at the Central Bank of Liberia (CBL) decreased to L$6.7 million in 2018 from L$1.5 billion in 2017 as per page # 65 of the CBL 2018 Audited Financial statements.

Or should the public not know if the National Social security Corporation (NASSCORP) deposits cash at the Central Bank of Liberia, including the $1.1M investment income it earned in 2014? NASSCORP web site reported that it earned $1.1M from investment portfolios in 2014. State-owned entities have not published their Annual Reports since 2014.

Disclose revenue collection

Additionally, government should disclose the revenue collected and how much it has allocated for wage bills, for example, the US $296M appropriated in the 2019/2020 budget. Messages from government are confusing the public. For instance, on the one hand, the Liberian Revenue Authority continues to state that it is collecting more revenue than projected. And, on the other hand, officials at Finance are complaining that the Government is not paying wages because the country has no money. So, please count our revenue.

How did the custodian of IMF L$13.9B become the owner? If custody is not equivalent to ownership, how did the Central Bank of Liberia (CBL) become the owner of L$13.9B (i.e., Special Drawing Rights given to Liberia) IMF lent to Liberia? CBL, the custodian of Liberia’s money including tax revenue, loan proceeds, treasury bills, etc., added, as part of CBL’s L$71B Accounts Receivable the IMF’s L$13.9B, according to page # 67 of the 2018 Audited Financial Statements. So, CBL’s Accounts Receivable is overstated.

Please provide Liberia’s cash balances at foreign banks

CBL 2018 Audited Financial Statements did not provide any information, for example, using the “Double Entry Accounting” to record the increase in CBL’s cash of L$4.9B in 2018 and L$7B in 2017. Generally Accepted Accounting Principles require accountants to record the business transaction on the left side (i.e. as debit) and on the right side (i.e., as credit), in accordance to Generally Accepted Accounting Principles. It is true, that officials recorded the debit side, and increased cash, but why it did not identify the item that should have been credited?

Moreover, officials stated that the cash increased because of the “Effect on exchange rate fluctuations,” according to page # 13 of the Audited Financial Statements, generated the additional cash. Yet, CBL officials did not disclose what services and/or products that it sold for cash (i.e., Operating cash); which assets (i.e., investing cash) it sold; and total cash it received (i.e., financing cash) from the sales of bonds, stocks, shares.

It appears CBL officials might have assumed that Liberia would pay its L$71B debt owed to CBL on 12/31/2018. Not only will Liberia pay its debt, but Liberia would pay the L$71B deb in US currency. And since Liberia’s currency has depreciated from L$124.45 at 1/1/2018 to L$157.58 at 12/31/2018, CBL will get additional cash from the Liberian government.

Food production in Liberia

To close Part II, let us visit the FrontpageAfrica story called “big agriculture…economic transformation projects.” In that article, the writer stated that Mr. Pierre Frank Laporte, the new Regional Country Director of the World Bank paid a courtesy call on President George Weah and promised that the World Bank is prepared to do big projects, especially agriculture.”

I like the agricultural idea, and here are a few observations:

  1. Serve local food at government’s ceremonies, which might have the effect of increased production: The Liberian government should study and adopt a policy, if not available, requiring ministries and agencies to serve cassava, potato, etc. at government’s functions. This initiative might encourage the public to consume more, and by extension, increase the consumption of local food.
  2. County-Agricultural competition: Government should establish, if not available, a County-agricultural competition to encourage Liberians to increase food production.
  3. Government should investigate prior agricultural programs: The government should investigate pre-1980 policies of the Agricultural Cooperative Development Bank(ACDB), and review reasons, if any, why many entrepreneurs do not borrow money to produce food. For example, commercial banks appropriated L$72B loan for entrepreneurs in 2018 and CBL allocated US$5M to agriculture in 2018.
  4. World Bank: Will any money-lending institution invest in food production since rice production does not generate quick and reasonable interest income? The World Bank 2017 balance sheet indicated that out of the US 330B of its total assets, 172 countries own less than 10% of the total assets.

Lower amounts allocated for food production did not discourage Dr. Jim Kim, the former President of the World Bank that Mr. Barack Obama, former President of the United States, appointed to lead the Bank. He had envisioned a world with fewer hungry children, which would enhance healthy and productive students. His subordinates at the Bank did not think so.

The Foreign Policy Magazine, in reporting numerous criticisms against Dr. Kim, carried the article called “Is Jim Kim destroying the World Bank or Saving it from Itself?” In that article, Mr. Jean-Louis Sarbib, speaking about President Kim views on food production, stated that, “…I don’t think that he understands that the World Bank is not a very large NGO.” Adding, Mr. Sarbib stated that bureaucrats at the Bank wanted income generating projects and not poor people’s food production projects.

It could be true that the World Bank is ready to assist poor countries. However, now that Liberia’s debt is around US $1B, Liberia should be careful in obtaining additional debt. Why do I say so? Well, the interest of money-lending international institutions might not be ours.

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