Liberia: CBL Board Takes Measures to Rescue LRD From Continuous Free Fall

The Board of Governors of the Central Bank of Liberia (CBL) has increased monetary policy rate here by 20%, a measure aimed at reversing recent trend in the depreciation of the Liberian Dollar against the United States Dollar, CBL announced Monday.

The statement issued by the Bank explained that the CBL Board of Governors took the decision while proxying for the Monetary Policy Committee (MPC) when it increased the monetary policy rate (MPR) by 250 basis points to 20%.

The decision was made during the Board’s sitting on 20 July 2023, according to a statement released Monday, July 31.

The Liberian Dollar has taken a nose dive in recent months skyrocketing exchange rate between the United States Dollar from LRD 150 to 186 to 1 USD, while on the black market, it’s between 188 to 190 to 1 USD.

During the meeting, the Board also mandated CBL Management to remove the ceiling on the CBL Bills, allowing Management to determine Bill’s issuance, consistent with evolving excess liquidity in the banking sector.

These decisions were made as a result of tightened global financial conditions, the Russian-Ukraine War, and the high level of non-performing loans within the domestic banking sector.

In arriving at these decisions, the Board noted the decline in global economic growth from 3.4% in 2022 to 2.8% in 2023, fluctuations in the international prices of some of Liberia’s main exports, increase in the price of rice, and the impacts on the domestic economy.

Notwithstanding the declining global economy, Liberia’s economic growth rate, which was projected to be 4.3 percent in 2023, was revised upwards to 4.6%, based mainly on the unanticipated rise in the mining and services subsectors. Increased manufacturing activities, induced by the expansion of electricity supply, contributed to greater growth in the domestic economy.