Dual Currency or Liberian Dollar

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Dual Currency or Liberian Dollar
Gov't Decides Soon, Blames Lack of Exchange Control on Price Hike
Fatoumata Fofana, Observer
May 28, 2009

MONROVIA, President Ellen Johnson Sirleaf, commenting on the astronomical hike in the prices of goods and services caused by the unprecedented rise of the US dollars against the Liberian dollar, says Government will soon decide whether it should use only the local currency or the US dollar as its legal tender or maintain both currencies.
At present, the exchange rate of the Liberian dollar (L$) to the United States dollar (US$) stands at L$70 to US$1 and L$70.5 to US$1 resulting in the ever rising prices of basic goods and services.

The prices of essential commodities including petroleum products, construction materials and other consumer goods and basic services have quadrupled over the past few days, resulting in high cost of living and a rising wave of crime in communities.
President Johnson Sirleaf has, however, attributed the increasing exchange rate of the US dollar in the country to a decline in the availability of US dollars.
Addressing a news conference in Monrovia on Tuesday, May 26, 2009, she alluded to the global economic meltdown as another problem leading to the current economic situation in Liberia.

According to the President, the price of rubber on the world market has dropped, so US dollar coming from export proceeds from Firestone has also declined.

“Remittances have also declined sharply. So the availability of US dollars has been limited and as a result, if you are going after something that is scarce, naturally the price goes up. So in buying it, the Liberian dollar goes up,” the President pointed out.
Commenting on whether the country should use only Liberian dollars or only United States dollars as its legal tender or even maintain both currencies in circulation, President Johnson Sirleaf had this to say: “We are trying to find out whether we should go dual currency or go with just Liberian dollar or just United States dollar. We don't have enough economic activities to go with only US dollar. And if we go Liberian dollar fully, we should be careful that we don't go out chasing the US dollar; find ourselves printing money and start to experience the problem of inflation as it is in other countries.”
The Liberian leader further disclosed that studies were being carried out by the Central Bank of Liberia (CBL) and the International Monetary Fund (IMF) to determine which way to go in terms of which currency to use.

“We are trying to approach it in a very professional way before we take any decision. However, we will try to make a decision on that this year but before that let us make sure that it minimizes the hurt to the economy and the Liberian people,” the President said.
“Government is trying to find means to mitigate this problem by using more Liberian dollars so that people can even pay some of their taxes and customs charges in Liberian dollars instead of US,” she added.

By giving preference to its own currency as against the US dollar, economic analysts believe that the Government will be taking further steps to streamline its economy. Neighboring states such as Sierra Leone, the Ivory Coast and Ghana have adopted a series of foreign exchange measures that help strengthen their economies at a reasonable level.
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Meanwhile, Government has also blamed the increasing hike in the exchange rate on the lack of exchange control. “We don't have any exchange control here, and that's part of the problem,” President Johnson Sirleaf explained.

The Liberian Chief Executive further hinted of the possibility of some individuals carrying the US dollars out of the country, something she said was detrimental to the nation's economy.

According to the President, “the US and Liberian dollars in circulation result in a double problem because anybody can pack US dollars in his/her suitcase and get away.”