1.5 Million Dollars Foreign Exchange Reserve Missing at the Central Bank of Liberia
The International Monetary Fund (IMF) declared that in 2003 the Central Bank of Liberia (CBL) failed to account for a $1.5 million decline in the foreign exchange reserve of Liberia. The foreign exchange reserve declined in 2003 from $1.8 million to $300,000. The central bank’s authorities told the IMF during its recent visit to Liberia that there was “no foreign exchange reserve transactions by the Central Bank of Liberia (CBL) in 2003.” The information was disclosed in the IMF Country Report 04/84 on Liberia released March 25, 2004.
According to the note to the report, The Central Bank of Liberia “failed to provide an explanation” to the International Monetary Fund’s authorities about the reason for the decline in the foreign exchange reserve position of Liberia. The latest revelation by the IMF is disappointing. However, it should not come as a surprise to Liberians. It may be recalled that The Perspective magazine reported recently that Governor Elie Saleeby and members of the Board of Directors of the Central Bank of Liberia designed a compensation scheme that pays them tens of thousands of dollars.
The IMF also stated in the report that the high volume of US dollars in circulation in Liberia makes the use of monetary policies for economic stabilization ineffective. The Central Bank of Liberia does not have control over most of the US dollars that flow in and out of Liberia because they do not flow through the banking system. Monetary policies are the national bank actions that influence “short term interest rate, the supply of money and credit to promote economic goals.” Therefore, the fund believes macroeconomic stabilization is “likely to be to be achieved in Liberia through fiscal policies”. Fiscal policies are government policies “regarding taxation and spending” to achieve economic goals.
Meanwhile, the IMF believes the duel currency system in Liberia (the use of the United States dollar and Liberian dollar concurrently) is contributing to the creation of a two-tier society in Liberia. According to the IMF, the US dollar is the currency of choice for the Monrovia elite, “trade and financial transactions,” while the local currency is mostly used by the poor and rural dwellers. This, according to the IMF may have an adverse impact on the income of the poor if there is a decrease in the value of the Liberian dollar. “The wealthier segment would be largely unaffected.” the IMF report stated. For example, if the value of the Liberian dollar decreases from $50 LSD to $75 LSD to 1 US dollar, it would cost the poor that mostly use the Liberian dollar more to purchase a unit of item than the wealthier segment of the Liberian society.
The IMF report also gives a clear picture of how Mr. Taylor and his cronies collected and spent government revenue between 1999 and September 2003. According to the report, the Taylor regime collected $73.8 million in revenue and grants and spent $63.5 million in 1999, a surplus of $10.3 million; $85.3 million in revenue and grants and spent 83.6 million in 2000, a surplus of $1.7 million; $69.5 million in revenue and grants and spent $73.3in 2001 a deficit of $3.9 million; $72.7 million in revenue only and spent $80.1 million a deficit of $7.3 million; and $31 million in revenue only and an expenditure of $32.6 million between January to September 2003, a deficit of $1.6 million. In sum, the Taylor regime collected $332.3 million in government revenue and grants and spent $333.1 million between 1999 and September 2003.
The Liberian people must fasten their seat belts. More of the extent to which Mr. Taylor and his cronies recklessly misused the resources of Liberia would be known once the pending European Union sponsored audits of the Bureau of Maritime Affairs, Ministry of Finance, Forestry Development Authority and Liberia Petroleum Corporation are completed. Meanwhile, Mr. Taylor and his cronies must account for the resources they misused to serve as a deterrent to the “contingent of hustlers” ruling Liberia.