“The Liberian Dollars has been under pressure in recent times depreciating 8.2 percent against the US Dollar from August 2012 to October 2013. This has made the price of key commodities like rice and oil more expensive and we know this has affected mainly ordinary citizens. However, the Government is working to control the situation,” Finance Minister, Amara Konneh when he announced several measures intended to control the US$ rate said.
Addressing a special news conference on Tuesday at the Ministry of Information, Finance Minister, Amara Konneh, said in the short term the Ministry of Finance will increase its sale of USD to the Central Bank of Liberia (CBL) in order to boost the country’s foreign exchange reserves position.
“In the medium-term, the MOF is engaging in a campaign to increase LRD revenue that will match its LRD expenditure needs,” Minister Konneh stated. The Acting Chairman of the Cabinet said while the movement of the exchange rate is largely a monetary Issue, fiscal actions or Inactions can bear greatly on this matter.
Accordingly and in consultation with the Central Bank of Liberia, Konneh said the Ministry of Finance is with immediate effect, institute the several complementary actions intended to improve the value of the Liberian Dollars and stabilize the exchange rate. “This Includes immediately and going forward, all taxpayers have the option to pay their taxes in Liberian dollar at exchange rates announced and published by the Central Bank of Liberia on the day of the transaction,” Minister Konneh explained.
Minister Konneh said this action will ensure that taxpayers do not have to buy US Dollars for the purpose of paying their taxes adding, “Any revenue collector who refuses to accept taxes in Liberian Dollar should be reported to the Ministry of Finance and appropriate disciplinary action will be taken against such staff. However, this policy action does not affect the customs duties which are a result of International trade,” Konneh asserted.
The Minister also said importers of petroleum products will also have the option to pay the Sales Tax portion of their taxes in Liberian dollars noting that this policy action will ensure that petroleum importers who are selling most of their products in Liberian dollars can use the Liberian Dollars to pay their sales tax which Is about 50% of their taxes on Imported petroleum. “They don’t have to exchange their Liberian Dollars for US Dollars to pay their sales tax,” he added.
Finance Minister Konneh said, Government will continue its efforts of ensuring that 25% of the purchases of Goods and services in the budget is spent on Liberian owned businesses. “We are taking some aggressive measures on dosing loopholes in our revenue collections,” he promised.
Among other measures to be taken, Minister Konneh said, as of December 2, returnees will no longer benefit from duty exemption on their imports, except those returning from studies and diplomatic assignment; vehicles more than 20 years old will not be allowed into the country and those above 10 years but under 20, will be charged higher duties.
He said NGOs and charitable organizations will be allowed duty exemption only on items directly related to their works; concession companies will no longer be allowed duty exemption on consumables and small items that can be bought on the local market. This will ensure that the big companies are buying from domestic businesses.
He said the Ministry of Finance will work closely with the Central Bank of Liberia to ensure that the issuance of Treasury Bills (T-Bills) is appropriate to mop up any excess Liberian Dollars on the market. “These actions are not a panacea in themselves but when complemented with other policy actions that the Central Bank has taken, we will begin to see some appreciation in the Liberian Dollar. This means that the Liberian Dollars will gain value against the US Dollars which will benefit those who are earning their incomes in Liberian Dollars by increasing their purchasing power,” Minister Konneh said.
He said these are short to medium term policy actions which do not address our vulnerability in a sustainable way. He added that the structure of the nation’s economy today lends itself to shocks of this nature noting, “Unless we can change the structure of our economy whereby we are heavily dependent on imports, we will always be vulnerable to happenings in the dollar and euro zones.”