Experts Warn Against De-Dallorization

By Alex Yomah

 Former Central Bank of Liberia Executive Governor, Elie E. Saleeby and other speakers have said that the local economy is dollarized, but warned fiscal managers  against  de-dollarization-stating  that the de-dollarization   cannot solve the current local currency hurdle fronting the economy.

Dollarization means, having both United State Dollars and the Liberian Dollars as legal tender for the local economy-while de-dollarization is intended to move away from both currencies and allow the Local currency as single authorized currency in Liberia.

 Speaking when he served as a panelist for discussions at a day-long economic forum organized by the Central Bank authorities   under the banner, “De-dollarization in Liberia: Implications for Effective Monetary Policy” indicated that de-dollarization of currencies will not automatically solve the current problem of loss in value of the local currency.

The Ex-governor, lecturing at the forum dismissed the perception that dual currency specifically   blaming allowing of the fluctuation of the United States Dollars (USD), also as legal tender could be a contributing factor to monetary instability as evidenced by the rapid depreciation of the Liberia Dollars (LRD).

He said those who perceive that dual currencies would create monetary instability, is incorrect and added, “This perception in my view is misinformed. Because the USD past and current regimes has been visually stabled overtimes while the Liberian dollar has loss value all times.

“I will argue that the presence of the USD provides the market driven barometer and measures the performance of the local economy and its currency,” he told his colleagues.

 Speaking on the de-dollarization, he   mentioned that such proposal   will not automatically solve the current problem of loss in value of the local currency.

According  to  the seasoned Economist, the role of money is to serve as medium of exchange of market on state of affairs and the local currency has not been representing the State of Affairs so,   if de-dollarization is to achieve, it can only be achieved through some structural changes in the economy coupled with strong macroeconomic management including notable fiscal discipline. 

Adding, “In fact there would be greater challenges in a short time before and after the transition of the de-dollarization,” the Liberian banker advised.

“Even if you de-dollarize, if you don’t have any fiscal discipline- you could have another situation,” explaining further. The Ex-Banker Governor  said, de-dollarization  and  switching  to a  single local currency  is not a short-term initiative;  its requires careful understanding  and appreciation  of  the possible implications , required policy and actions, detailed planning and others.

The  forum which  was sponsored  and  organized  by CBL under the sentry of outgoing  Bank Governor, Nathaniel  R. Patray,  assembled  some of Liberia’s best minds  including Elie E. Saleeby, Former Executive Governor of CBL, Geoffrey Oestreicher, International Monetary Fund (IMF) Resident Representative in Liberia,  Mr. Lekun  Balogun, Vice President  of Liberia Banker Association, and Prof. Geegbae A. Geegbae, Vice President for Institutional Development and planning, University of Liberia and among others.

The objective of the CBL Economic Forum is to create public awareness and understanding about CBL’s monetary policy and functions.

It further stated that as the economy is currently undergoing a period of challenges, it is important that CBL engages the public on the financial and macroeconomic policy decisions it is embarking upon to create transparency and better public understanding of CBL’s operations.

 Earlier speaking, CBL Governor , Nathanial Patray  said  the holding of this second economic forum is timely because it is took place at a time of serious discussion  on monetary matters, especially as it relates  to the printing of new banknotes, as was recommended  by the recently held Economic Dialogue in Monrovia.