Monrovia, Liberia- Earlier this year, in a move to address the country’s economic crisis, the President of Liberia H.E. Dr. George Manneh Weah announced a US$25 million economic stimulus, which was intended to regulate the exchange rate as well as reduce prices of commodity. However, with little impact felt, it left the public wondering whether the money was ever infused into the economy at all, until Finance Minister Samuel Tweah in an interview on state broadcaster ELBC made an astonishing revelation.
Minister Tweah told listeners that US$15 million of the amount was mopped through local money exchange bureaus to buy Liberian Dollars from the market, a news which received mixed responses from the public.
In a survey of public opinions conducted from across the political aisle, many Liberians expressed shock at Minister Tweah’s statement, highlighting inadequate impact, with little or no real results seen.
“I was surprise when the Minister made the remark. Prices are still high, and people are barely getting by. What did the money do for Liberians?”, Mrs. Lorpu Sackie, a local businesswoman remarked.
Economists told The Liberian Billboard, money exchange bureaus and money changers are the highest consumers of our foreign currency because they have excess note of our local currency; they go out in pursuit of the foreign note. They said, the danger of giving them US$15 million with the aim of carrying out mopping is that, they will keep it in their private reserves and give out the value to the central bank.
An economist who asked to remain on condition of anonymity said, “All over the world, economists use commercial banks to mop up excess liquidity because of the monetary laws that guide cash disbursements. For example, our current financial regulations does not allow any commercial bank to give out more than 80 percent of foreign notes in withdrawal using western Union, Moneygrams, etc.”
He said additional inflation is still possible with the money exchange bureaus and money changers because they are the original dealers of flexible rate.
“There is always one or more percent increment above what the Central Bank has. Immediately those with purchasing power buys the foreign liquid given them by the government, the rate will increase further. If you look at the market now,the rate was L$150 to US$1. Since the foreign liquid was absorbed, the rate has increased by $7. It’s now L$157 against US$1,” he added.
Meanwhile, officials and supporters of the government are contending that Minister Tweah made the right move, as the US$15 million mopping exercise had positive dividends.
“If that money was not given to money changers and money exchange bureaus, by this time we would experienced one of the worst inflation in history. We would have been talking about an exchange rate close to L$200 to US$1,” Mr. Jerry Cooper, an economist and a CDCian said.
Mr. Cooper argued that the money was not intended for direct price control, but to put a cap on the rising exchange rate, which in essence would also maintain stability in the price of commodities.
Further investigations conducted by The Liberian Billboard found out that many commercial banks did not participate in the mopping exercise, confirming Minister Tweah’s statement.
“We are not aware of any mopping exercise and no money was channeled through our bank for such purpose. To the best if my knowledge, no commercial bank participated,”, a senior commercial bank executive told The Liberian Billboard.