The Central Bank of Liberia (CBL) has announced a special Ebola relief package aimed at strengthening the Liberian economy and easing the economic burden cause by the Ebola crisis on the people.
The Executive Governor and Chairman of the Board of Governor of the CBL Dr. Joseph Mills Jones delivering a press statement in Monrovia yesterday said “the Ebola Virus Disease (EVD) has had a profound negative impact on the economy.”
Governor Jones said projections show that the growth of the economy, which was expected to average 6.6 percent over the next three years before the Ebola epidemic, is now expected to slow down to only about 1 percent.
He said “the Board of Governors during its last meeting in November considered this as unacceptable, being a scenario for rising unemployment and increased poverty.”
Governor Jones further disclosed that the Board of Governors of the CBL further concluded that it was important for the authorities to be more focused on addressing the structural weaknesses in the economy to enable it to withstand shocks, similar to that stemming from Ebola.
Dr. Jones said “this means that even as we take short-term measures to stabilize the economy, we should be looking beyond just recovery, which could leave the economy with the same vulnerabilities that we are now experiencing, leaving the country susceptible to a vicious circle of poverty and underdevelopment.”
Against this background, Dr. Jones said it is important to encourage all to think outside the proverbial box to come up with new approaches which will include as a first-order condition, a more rapid rate of economic growth driven by domestic developments rather than reliance on the enclave sector.
“We are pleased to note that there is a sense of urgency within the Economic Management Team (EMT) on the need to explore various options to revive the economy, including the need for a new strategy to ensure sustainable domestic food production, especially rice, which should bring to the table a review of the existing regime for rice importation,” Dr. Jones stressed.
Dr. Jones further disclosed that during its last meeting in November, the Board of Governors agreed to a number of measures aimed at alleviating the stress posed by the Ebola crisis on both the banking system and the economy in general.
He noted that banking hours have been adjusted to be and services will be rendered on Mondays to Fridays from 9:00 am to 2pm, and Saturdays: 9:00 am to 12 noon
The CBL Boss said a mechanism has been put in pace to provide liquidity support to the banking system, in case the need arises, considering the CBL’s role as Lender-of-Last resort while exercising dispensation on specific regulations in order to reduce the provisioning burden on Non-Performing Loans(NPLs) associated with the Ebola crisis to help the commercial banks in restructuring and refinancing the private sector, which is necessary for the rapid recovery of the economy.
The Central Bank Governor said commercial banks have agreed with the CBL to be flexible in the restructuring of delinquent facilities associated with the Ebola Crisis, saying, “also, all default charges will be waived, and some, if not all accrued interest, will be waived on a case-by-case basis.”
Dr. Jones also said the repayment period to the CBL for all participating banks that received funds associated with the various stimulus initiatives of the CBL will be extended by two years, and the interest rate reduced from 3 to 2 percent, as a means of reducing the financial burden of the crisis on the banks and helping to improve their balance sheet.
He disclosed that as an additional support to the banks, the interest on the CBL’s initiative for the period of the Ebola crisis will also be waived.
Dr. Jones said commercial banks involved in implementing the stimulus initiatives of the CBL will be required to restructure delinquent facilities under those initiatives with a six month grace period for resumption of payment. “Interest will also be waived for the period of the Ebola crisis. This is intended to provide time for Liberian SMEs to restart their activities,” Governor Jones said.
“In the wake of prolonged school closure as a result of the Ebola Crisis, which has contributed to increased debt burden of the private schools that have borrowed from banks, the CBL will pay off the outstanding loan obligations of all private schools, from kindergarten through high school. The commercial banks have already provided the CBL with the list of schools and the amounts involved,” The CBL Executive Governor said.
Dr. Jones noted that this intervention serves two purposes, saying, “it helps to relieve the banks of the burden of provisioning, where schools find themselves unable to repay the debts, and it helps to relieve the potential burden on parents who may already be experiencing financial difficulties from increased fees that schools may have to impose in order to meet the obligation of the banks.” See Full Text of Governor Jones’ Statement inside