Liberian Govt. moves to stabilize exchange rate

John Momoh | November 21, 2013

In the wake of the staggering exchange rate between the Liberian dollar and the United States dollar, the Ministry of Finance and the Central Bank of Liberia have adopted a number of short and long term measures to mitigate the problem and bring relief to the population, Finance Minister Amara Konneh has disclosed in Monrovia.

For months running, the Liberian dollar has sharply depreciated against the US dollar, something that has prompted public outcry. The current exchange rate between the Liberian dollar and United States dollar is LD$80 to 1US$.

According to the Finance Minister, the Liberian dollar has been under pressure in recent months thus forcing it to depreciate at 8.2% against the U.S dollar since August 2012.

He said the situation has seen prices of basic commodities in the country soared. “We know that this has affected mainly ordinary citizens which is [the reason] why the government is working to control the situation,” Minister Konneh said.

The Finance Minister made the disclosure of plans by the government to stabilize the exchange rate between the Liberian dollar and the United States dollar during a special press conference held on Tuesday at the Ministry of Information, Cultural Affairs and Tourism.

Among policy measures to stabilize the exchange rate, he said the Ministry of Finance plans to increase its sale of the US dollar to the Central Bank of Liberia in a bid to boost the country’s foreign exchange reserve position.

“In the medium term, the Finance Ministry will increase its campaign to ensure that taxes paid in US and Liberian dollars exchange ratio are announced on a daily basis at the Ministry,” Konneh said.

He said all tax payers will have the option to pay their taxes in Liberian or US dollar at exchange rates announced and published by the Central Bank of Liberia on the day of the transaction. He added that the measure will bring relief to tax payers because they will not be required to purchase US dollars in order to pay taxes.

Finance Minister Konneh: “Any tax collector refusing to accept taxes in Liberian dollars equivalent should be reported to the Finance Ministry and appropriate disciplinary actions will be taken. However, this action does not affect customs duties which are the result of international trade.”

Additionally, he said the Ministry of Finance will work closely with the Central Bank of Liberia to ensure that the issuance of treasury bills is appropriate so as to mop up excess Liberian dollars on the market.

Also, as part of policy measures taken by the government to stabilize the exchange rate problem, the Finance Minister said concession companies will no longer be allowed duty exemption on consumable and small items that can be purchased on the local market. “This will ensure that big companies are buying from the domestic market,” he said.

Still, he said the government has also decided to ban the importation of vehicles more than 20 years old into the country while higher charges will be levied on vehicles above 10 years old, but less than 20 years.

As of December 2, 2013 returnees to Liberia will no longer benefit from duty free exemption on their imports with the exception of Liberians returning home from study and diplomatic assignment abroad, he announced on Tuesday.

Meanwhile, Minister Konneh warned that in order to address the country’s long term foreign exchange problem, Liberians should reduce their dependence on foreign imports, especially nonessential and agricultural products.

“We need to invest more in agriculture for self-sufficiency and possible export. Unless we do this our vulnerability will always remain unnecessarily high,” he said.