By our Staff Writer
The Central Bank of Liberia (CBL) says there is no shortage of cash in the country’s banking system, but rather “a glitch in release of currency”, while announcing an intervention to stabilize the Foreign Exchange rate.
In the past week, depositors at various local banks have found it difficult to withdraw cash on demand, due to reports of serious liquidity problem at commercial banks as well as the CBL.
But CBL Executive Governor, Milton A. Weeks told a news conference in Monrovia on Thursday, “there was a glitch in releasing of currency for about a week but the problem has now been resolved.”
He clarified that there has not been any shortage of cash at the country’s Central Bank and in the banking system but only a delay.
“There is currently no pending request for the release of cash from commercial banks,” Governor Weeks told Journalists.
At the same time, there has been a rise in inflation in Liberia in the past year, a CBL report on the state of the Liberian economy has said.
“Headline inflation reported at end-October 2017 was 11.9 percent, 2.0 percentage points higher than the 9.9 percent recorded during the same period in 2016,” the CBL Governor said in a December 21, 2017 presentation.
The growth in inflation was said to be mainly driven by the depreciation of the Liberian dollar and the increase in the prices of petroleum products on the market.
The rate of inflation is expected to further rise to an estimated 12.4% at the end of December, 2017.
“For the first nine months in the year, relative to the same period in 2016, GoL Liberian dollar expenditure rose by 21.9 percent while its US dollar expenditure declined by 27.3 percent. Liberian-dollar liquidity mainly from outside banks and to help smooth out volatility in the exchange rate. As at end-November 2017, the CBL had intervened in the FX market with US$49.6 million compared with US$24.5 million intervention during the same period in 2016,” the CBL report said.
“The CBL will continue its periodic intervention in the Forex market on a regular basis to enhance market predictability and help to meet the Forex demand of importers and smaller Liberian businesses, despite the meager resources the Bank has at its disposal,” Govovernor Weeks said.
The Liberian economy is persistently being bedeviled by capital flight, with FX leaving the country in recent times increasing drastically. It was disclosed that over US$449 million was remitted out of Liberia in recent times.
Money transfer intervention in the market by the Central Bank is said to have further exacerbated the exchange rate crisis in Liberia.
“The CBL has only been able to achieve the level of FX intervention in the market by applying the 25% exchange for local currency of the personal inward remittances through the major money transfer operators,” CBL Governor Week noted.