By Varney K. Sirleaf
The nonstop inflation in the exchange rate between the Liberian and its USD counterpart seems not ending just too soon as many had expected.
Many Liberians who spoke to this paper yesterday blamed the unbearable hardship in the country to the high exchange rate in the economy.
Some said the high rate is seriously affecting the market price something when not properly handled might cause serious problem in the country.
Others also blamed the situation on the government agencies that are responsible to steer the affairs of the economy; namely the Ministry of Finance and the Central Bank of Liberia. “We see this rate issue as a political one between the Central Bank and the Ministry of Finance,” they said.
It can be recalled that the last time when President Sirleaf addressed the country on the state of the economy, she said the problem between the Central Bank Governor Jones and Finance Minister Konneh has been resolved and that the Monetary and Fiscal policies were now going to work to resolve the financial crisis the country is facing.
“Why should there be a conflict between the Minister of Finance and the Governor of the Central Bank,” a concerned citizen who called for anonymity asked. “If they cannot handle our economy, they should do us justice to relinquish their positions in order to stop this hardship upon us”, he angrily emphasized.
A student reading Economics at the AME Zion University said according to British Economist, John Maynard Keynes, ‘Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. It is the sister strategy to monetary policy through which a central bank influences a nation’s money supply. These two policies are used in various combinations to direct a country’s economic goals.’
He further stated that the fact that there is conflict as was stated by the President between the Minister of Finance and the Governor of the Central Bank of Liberia, there will be no cohesion between the two agencies of government in regulating the financial sector of the country, thus causing hardship for the masses.
Another Liberian who is also an economist had this analysis to make about the country’s economy that is slowing down. “Let’s say that an economy has slowed down. Unemployment levels are up; consumer spending is down and businesses are not making substantial profits. A government thus decides to fuel the economy’s engine by decreasing taxation, which gives consumers more spending money, while increasing government’s spending in the form of buying services from the market (such as building roads or schools). By paying for such services, the government creates jobs and wages that are in turn pumped into the economy. Pumping money into the economy by decreasing taxation and increasing government’s spending is also known as “pump priming.” In the meantime, overall unemployment levels will fall. With more money in the economy and fewer taxes to pay, consumer demand for goods and services increases. This, in turn, rekindles businesses and turns the cycle around from stagnant to active, he narrated.
According to the exchange rate on the market yesterday, USD$1 is between 92 to 93 Liberian dollars.
“In fact, the way things are going now, the rate is chasing the three digits and when this happens, a serious economic problem will erupt in this country,” a Money Exchanger warned.
Many Liberians are decrying on the high increase of the exchange rate and the dormancy of the government to find an amicable solution to the untold sufferings the people are undergoing.
Earlier this month, former Minister of Planning and Economic Affairs Dr. Togba Nah Tipoteh cited some of the many reasons why the exchange rate continues to escalate. Follow the full account of the former Minister of the then Ministry of Planning and Economic Affairs below:
Former Minister of Planning and Economic Affairs, Professor Togba-Nah Tipoteh has taken another look at the current state of the Liberian economy, the increase in the exchange rate in the country.
According to Dr. Tipoteh, the main instruments used by the citizens, especially, the money, which sustains the day-to-day wellbeing of the ordinary people has become something serious, “Money is something that people all over the world, including Liberia, that is being used every day to buy something,” Dr. Tipoteh stated.
“Whenever people want plenty of something, but that something, like food, is not plenty, then the price of that something goes up, whenever there is much more demand for the food but not much of the food is available, then the price of the food goes even higher; so, is the case with money, each country, like Liberia, has a national currency or national currencies,” Dr. Tipoteh averred.
According to Dr. Tipoteh, in Liberia currently, the demand for the United States Dollar is very high to the Liberian dollar, even though the two currencies are considered and recognized as national currencies but due to the current exchange rate, the Liberian Dollar stands from 80 to 90LD to one United States dollar.
The former Planning Minister said, Liberia imports almost everything to the point where by March of this year, they were importing USD70million more worth of goods than the worth of goods that it was exporting, which according to him, there are influential former Liberians in and out of the government now United States citizens, who influence the government to have more interest in the United States dollar because they need to send that currency to the United States to cover their families’ housing bills and other personal bills.
At the bottom of everything is the lack of the commitment of this government, like past Liberian governments, to improving the value of the Liberian dollar by adding value to the production of our abundant natural resources like iron ore, rubber and timber.
The former minister further asserted “A 16 year-old Liberian child told veteran Liberian Journalist, Dr. Kenneth Best and I nearly two years ago, that Liberia has iron ore so why is Liberia no producing steel products; Liberia has rubber and timber, so is it not producing rubber and timber products also.
The present government spends millions of United States dollars importing furniture and intentionally giving up the opportunity of using Liberia’s world class timber to produce furniture that would be used in Liberia and exported to many countries which could improve the value of the Liberian dollar and therefore reduce the high quantity of Liberian dollars used to get the United States dollar.