Off late the Central Bank of Liberia (CBL) has been pumping millions of Liberian dollars in the economy in a move it says is aimed at providing opportunities that will stimulate the growth of Small and Medium Enterprises (SMEs) thereby building a middle class in the long run. In an attempt to increase demand for the Liberian dollar and to reduce the high pressure on the demand for US dollar, government policymakers pronounced few months ago that taxpayers will be allowed to pay some of their taxes in Liberian dollars. It makes sense for the CBL to influence the demand for the US dollars because it is supply and demand for a currency that sets the exchange rate. But Liberia is an economy which is largely import base and many, if not all of those provided with the CBL'S loans scheme are importing what they trade in. In preparation to buy goods from China , Dubai , Ghana and other places around the world, SMEs and big Lebanese traders run after the US dollars creating a whole lucrative business for Money Exchangers. In most cases like this, the Market forces are left in the hands of the Lebanese traders and the SMEs to determine the exchange rate between the two currencies increasing pressure on demand for the US dollars which is demanded by traders for foreign transactions. Worst experience yet' But this year, business for Money Exchangers has gone the other way. Rafamny T. G. Wellie, 36, a money exchanger at the corner of Ashmun and Mechlin Streets says in his 5 years of experience this is the worst. "Before, when the season is approaching more US can be on the market but this year the US is too scare, we don't really know what is causing it. I think most of the business people they need the US to go and buy goods or free the business. Right now if the business people come to buy US we can demand more from them because the money is hard to find and they need it more. " Rafamny wonders whether the CBL's policy is yielding results "Maybe it is because they are putting out too many Liberian dollars. It's like plenty Liberian dollars chasing small US dollars. That is why the demand for the US dollar is too much." Abraham Kamara another money exchanger in Central Monrovia adds that the problem they are encountering on the money market boils down to economic downturn. "The US rate is higher because the market people are buying the US plenty so they can go bring the market to sell. This year is different, last year the rate was 75 LD to 1US now the rate is 82. The thing that behind this whole money business, me I think the government is not taking this money business serious they have the power to say the money must come down and it will happen." Kamara thinks the CBL should do more. "But the government does not want to apply effort. The rate is way up they can't talk and take any decision. And it is affecting my business because when the rate is up I can't get profit." Friday Willie, has been an exchanger down Waterside since 2008 laments: "When you carry Liberty in the store to buy they don't want it they want US because of that, we the money exchangers find it difficult. We can't get the US. If you go buy something anything you touch will be in US. What really causing it is that our currency is in the hands of the foreigners and the big government officials are sending the money out." Jones, Konneh Differ on inflation The dilemma has put the CBL and the Ministry of Finance on opposing aisles. CBL Governor Mill Jones blames the inflation on the inability of the Central bank to print United States dollars sold on the market. "The CBL does not make the United States dollars that it sells to the market. The economy has to earn it, as it has to earn any other foreign currency. The other reason is that government has prevailed upon the CBL to prioritize the accumulation of reserves. It is important to point out that under such circumstances, any increase in pressure on the foreign exchange market will more likely lead to additional depreciation of the exchange rate. But we will continue to work on the matter, including the work underway to develop the interbank market." According to Governor Jones the CBL is aware that inflation hurts the poor, the most which is why the CBL has been intervening in the foreign exchange market to help keep the exchange rate stable, and has succeeded by and large in doing so in the past few years. "It is important to point out that under such circumstances, any increase in pressure on the foreign exchange market will more likely lead to additional depreciation of the exchange rate. But we will continue to work on the matter, including the work underway to develop the interbank market", Governor Jones stated. But Finance Minister Amara Konneh sees the high inflation currently affecting the country differently. Minister Konneh believes that more Liberian dollar supply in the economy is part of the factor responsible for the Liberian dollar depreciation to the US dollar. "It is not because of bad policy. It is because of policies that we pursue to improve the lives of our people which can create some effect in the other part of the economy," he said. "Another reason for the depreciation is the injection of more Liberian Dollars in the economy in the last six months. We are trading more in Liberian dollars now so the circulation is increasing." In contrast, Konneh puts the blame of the depreciation of the Liberian dollar and inflation squarely upon the unevenness of trade. But the CBL has over the period infused millions of Liberians dollars into economy under its loan scheme to businesses. "The depreciation of the LD is being driven mainly by the structural imbalance between the supply of and demand for the US dollar in the market due to high and growing trade deficit with practically everything that is consumed in the Liberian economy being imported while exports receipts have somewhat stagnated," Konneh said. But Economic Experts say de-dollarization, increasing agricultural production leads to less importation of food crops and possible export of cash crops, and containment of capital flight among others will be the way to solve Liberia's semi uncontrollable inflation. For now, economists remain baffled over the downward trend of the economy in a post-war nation on the mends. For antsy consumers and business owners, the US dollar has become a gold dust with many hoping for a way out of the looming economic impasse threatening Liberia's economic revival.
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