By Reuben Sei Waylaun
As the Central Bank of Liberia seeks autonomy which will give the leverage to effectively ensure monetary and fiscal policies, members of the Liberian Senate have warned that their ‘constitutional power’ wouldn’t be taken from them and given to the Central Bank of Liberia especially on the printing of monies.
It is the right of the state to conduct monetary policy, but some experts believe that it may not be credible if done by the government because the government has many competing objectives.
If the autonomy is given to the CBL, it will have extensive mandates and it also gives it liquidity power according to Deputy Central Bank Governor for Economic Policy, Dr. Musa Dukuly.
Article 54 of the 1999 Act of the CBL, says the CBL shall not be liquidated except by legislative enactment.
Autonomy will create operational freedom and reduce institutional constraints. This will enable the Central Bank to have a clearly defined and prioritized objectives, sufficient authority to achieve its objectives and remain credible.
The Central Bank wants an amendment to the 1999 Act. Speaking at the public hearing organized by the Liberian Senate’s committee on Banking and Currency Tuesday at the Capitol Building, Dr. Musa Dukuly, CBL Deputy Governor for Economic Policy called on the senators to ensure the passage of the Act which he said will ensure the effectiveness of the bank’s liquidity power.
“It’s only in Liberia that we need legislature approval to address liquidation issues. It’s good, but will create delay. We are not exclusive of government. But certain part of our autonomy should not be compromised,” he said.
He said this will help boost the credibility of the monetary policy of the bank. Autonomy reduces the perceived inflation bias and thus the real interest rate, which advances sustainable economic growth.
Article 34 (ii) of the 1986 Constitution states that “No monies shall be drawn from the treasury except in consequence of appropriations made by legislative enactment and upon warrant of the President: and no coin shall be minted or national currency issued except by the expressed authority of the Legislature. An annual statement and account of the receipt and expenditure of all public monies shall be submitted by the office of the President to the Legislature and published once a year. (iii) No loans shall be raised by the Government on behalf of the Republic or guarantees given for any public institution or authority otherwise than by or under the authority of a legislative enactment.
Meanwhile, Senators Abraham Darius Dillon, Varney Sherman, Morris Saytumah said they will not give their powers to the Central Bank of Liberia.
Senator Varney Sherman said “You want to print monies, come to us to grant your request.”
The Grand Cape Mount lawmaker also said the new Act is ‘so limited’ and there is no ‘dream’ saying we are not thinking about ten years from now.”
In a brief interview with legislative reporters, the Chairman of the Senate’s Committee on Banking and Currency, Senator Marshall Dennis of Grand Gedeh County said the proposed CBL Act is in place and it’s part of law making that laws once made can be amended.
Senator Dennis said it’s the right of the senators to accept, reject and add to the proposal.
“If they want our power, we need to go through referendum because it’s constitutional. We need the right things to be done,” Senator Dennis said.
The hearing was graced by experts from the business community. They include the Liberia Bankers Association, Liberia Business Association, Liberia Chambers of Commerce, among others.
They endorsed the proposal from the CBL, but want due diligence. According to them, they have been involved into the processes leading to the Act reaching the Liberian Senate.