BEWARE! Ill-Conceived Economic Policies Have Wrought More Harm Than Good

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The attention of the Daily Observer is drawn to the story carried in its July 3, 2019 edition headlined “MoCI Announces New Policies, Measures”. The story, written by Daily Observer reporter Alvin Worzi, says Commerce Minister Wilson K. Tarpeh has announced major policy measures which includes price tagging, open display of exchange rates at major business centers and compulsory acceptance of Liberian dollars in exchange of goods and services.

Other measures announced included the replacement of the Import Permit Declaration (IPD) system with the Import Notification Form (INF). According to Minister Tarpeh, the INF increases the efficiency of the import process because the form can be filled out online in minutes, printed out and taken to BIVAC for pre-shipment inspection.

He furthered that the INF does not require signature or approval by MoCI if the information matches the invoice of the shipment indicating that such can neither be rejected by the Commerce Ministry or BIVAC. For example, an importer could bring in a shipment of contaminated meat or dairy products and just simply notify the Ministry at the last minute. Since neither the Ministry nor BIVAC can reject it, the pre-shipment inspection regime becomes rather meaningless.

The replaced IPD system came into use in 1985 and it was introduced as part of measures to control the allocation of scarce foreign exchange. Under that system, an importer wishing to bring in goods was required to submit a list of the intended imports to the Commerce Ministry which in turns forwards it to the pre-shipment inspection agency, BIVAC which would establish quality of declared items and recommend applicable tariffs. Under this system, the importer is indemnified in case of loss or in case goods supplied are substandard.

But more to that, after the pre-shipment inspection agency submits its Clean Report of Findings (CRF) the importer then applies for an irrevocable letter of credit from an accredited bank which then provides the foreign exchange to finance the transactions. All this was intended to insure that allocation of scarce foreign exchange would not be directed to the import of luxury items as opposed to essential commodities.

The question is whether the INF system requires mandatory transactions through the banking system. If it does, will the banks become obliged to provide the foreign exchange if for instance the importer simply notifies that he is bringing in a fleet of luxury vehicles or private jets? If not, then from where would the required foreign exchange be sourced to finance such transactions?

Further, the Minister was silent on the controversial Cargo Tracking Note which, from all indications, is a major contributing factor to the rise in prices, the shortages now being experienced and the continuing fall in the value of the Liberian dollar against the United States dollar. Additionally, it remains unclear how the Minister intends to have producers of goods and services to price and sell their goods and services in Liberian dollars. Threats to fine violators from US$50,000 upwards do not appear convincing.

Does this mean, for example, passport applicants will now pay in Liberian dollars or will driver license, vehicle registration, real estate and other taxes, such as the Cargo Tracking Note, now be paid in Liberian dollars? This is not likely to happen especially in view of the currently existing dual currency regime.

The Commerce Ministry is without doubt challenged with many troubling public concerns to which it has responded with these newly announced measures which raise questions whether they are part and parcel of an overall GoL strategy to resuscitate the moribund economy or whether it is the Ministry’s self-designed strategy to address the current economic malaise.

The concerns are heightened by policy initiatives announced by Finance Minister Tweh who has declared that henceforth, Western Union, Money Gram and other similar institutions will pay remittances in Liberian dollars. The question is, with the current shortage of Liberian dollars at the various commercial banks, evidenced by the recycling of mutilated banknotes including the legacy notes, from where will GoL source the Liberian dollars to distribute to commercial banks to pay beneficiaries?

In the wake of the announcement by Finance Minister Tweah, declaring that beneficiaries will receive their remittances fully in Liberian dollars, this newspaper has been inundated with expressed concerns about the implications of this latest proposed measure. From what the Daily Observer has been able to piece together, it appears that there is a rising groundswell of public opinion opposed to the measure.

Minister Tarpeh unwittingly underscored the fact that some businesses transact only in US dollars and are rejecting the local currency. When he declared that the CDC led government is aware of the problem, particularly against the realization that most Liberians’ salaries are paid in Liberian dollars; yet, some businesses are demanding US dollars as the currency of transaction.

In view of these developments, the Daily Observer once again reiterates its call for engagement by all stakeholders to work together to develop a common consensus on how to rebuild the Liberian economy on a sustainable basis. As it appears, too many cooks are in the kitchen with each trying to outdo the other with the application of special recipes. And as the old saying goes, “too many cooks spoil the soup”.

A plethora of frayed GoL economic policy pronouncements by various actors is adding more confusion to the mix and actually doing little or nothing to alleviate the hardships and sufferings currently being experienced by most Liberians. Public sector managers must step up their game and stop playing self-enrichment games.

On matters concerning the economy, GoL needs to speak with one voice. Economic policy making has to be concerted and coordinated lest they convey the impression that, like the government of Ellen Johnson Sirleaf, this government is also making policies on the fly, which spells trouble.

Why? It is because experience shows ill-conceived policies have wrought more harm than good and succeeded in alienating the people from their government.

2 COMMENTS

  1. Insightful piece: economic wellness in poor countries induces social cohesion and stability; so, stakeholders’ input in these challenging times is germane.

  2. Mr. Sylvester Gbayahforh Moses

    And so how do you encourage or involve stakeholders’ input?

    Where does the buck stop?

    How do you delegate power or authority and ensure that those who occupy strategic positions are doing what they were appointed or elected for?

    What guidelines do you set to measure the performance and controls of vital projects?

    How can you tell that your policy ;pronouncements vary sharply from your actual results? If so, could you site an example of how you would use contingency plans to address failures?

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