MONROVIA – The Executive Governor of the Central Bank of Liberia, J. Aloysius Tarlue, Jr, says despite the national financial clearinghouse having lost public confidence in the past, mostly for the wrong reasons, the Bank is now on an upward mobile trajectory due to the sagacious decision of President Weah to appoint a new management team and restructure the Board of Governors, which led to a concerted reform that focused on correcting all existing weaknesses at the Bank, including internal controls, procurement, currency management operations, regulatory and supervisory processes, among others. Governor Tarlue also attributed the Bank’s achievements in gaining the level of public credibility and trust to the Bank building a new partnership with the media community.
Making the remarks on Friday, December 16, 2022 at a local restaurant during programs marking the induction of officers-elect of the Publishers Association of Liberia (PAL), Governor Tarlue said the Bank’s image over the recent past had been corroded by issues that included the alleged missing 16 billion; the mishandling of US$25.0 million mop-up exercise; the unprecedented level of inflation rate; the acute and persistent liquidity, which undermined public confidence in the banking system, causing a virtual cycle of liquidity crisis; and the unsustainable budget because of high overemployment and non-transparent procurement process.
“In addition to these unfavorable situations was a more general macroeconomic challenges, which necessitated the accession of the country to the IMF Extended Credit Facility (ECF) program in late 2019,” Governor Tarlue averred.
“In order to put the Bank on a positive trajectory, His Excellency, President George Manneh Weah, Sr. appointed new Management team, which included me, and restructured the Board of Governors. Following this, the Bank under the guidance of the Board of Governors, embarked a concerted reform of the Bank focused on correcting all existing weaknesses at the Bank, including internal controls, procurement, currency management operations, regulatory and supervisory processes, etc.
Further to the above, we developed a new strategic plan (2021-2023) anchored on rebranding the image of the Bank and the mandate of the Bank as enshrined in Section 5 of the Amended and Restated Act of the CBL (2020), which is one of the milestone achievements.
“As a result of our reforms, we have made significant progress in turning the situation around and rebuilding public trust in the Bank and the banking system in general, thanks to the ECF program,” Governor Tarlue said.
According to Governor Tarlue, the achievements of his administration include the Bank having a greater Board oversight where all key decisions and policies have been made by the Board of Governors unlike the past; the institution of major reforms of the Bank’s internal controls processes and system, and adoption of a prudent financial management policy, which has put the Bank on a strong financial footing that enabled the CBL to carry out its monetary policy more effectively unlike in the past.
The Bank also made significant improvement in reducing inflation rate from as high 30 percent by end of 2019 to as low as 6.9 percent average inflation rate, which represents one of the lowest inflation rates in the West African sub-region, largely on account of our effective monetary policy stance coupled with prudent fiscal management by the Government. In addition to this, the CBL has achieved broad stability of the exchange rate of the Liberian dollar for a long period compared to prior administration when the exchange rate was very much volatile and uncertain, Governor Tarlue stated emphatically.
“We have ensured that the banking system, and financial system in general remain strong, viable and inclusive. In this regard, we have strengthened our regulatory and supervisory oversight through enhanced supervisory strategy and more robust monitoring of the financial system. A key milestone in this effort is the drafting of new Banking Act which is currently at the National Legislature, reflecting a significant amendment to the New Financial Institutions Act of 1999. The New Act seeks to strengthen the resolution regime and supervisory roles of the CBL.
“We are currently implementing a currency reform on a scale never experienced by the Bank before. For the first time in over 20 years, we are printing and minting a new family of banknotes and coins in the tune of L$48.734 billion with the re-introduction of new coins after almost 30 years and introduction of L$1,000 banknote for the first time. It is worth noting that the CBL is carrying out such a transparent currency procurement process with the involvement of our external partners (IMF and USAID through Kroll). The procurement process of the new currency was acclaimed by the US Embassy, noting that other agencies of government could emulate.
“Notwithstanding the effort to ensure that we have adequate banknotes and coins to serve the needs of the economy in the medium-term, we are also promoting digitization of the financial services and transactions as part of our National Financial Inclusion Strategy. We continue to see increases in mobile money transactions and other electronic payments.
“We are making strides in modernizing our national payments infrastructure. On this note, we have secured up to US$7.0 million to finance the upgrading of our National Electronic Payments Switch (NEPS). This will significantly help in promoting interoperability among the different players in the payments system space, promote regional trade through the Pan-African Payment System infrastructure and promote effective and transparent public financial management through improved revenue collection and payments for expenditures,” Governor Tarlue said.
All of these achievements, according to Governor Tarlue, are key contributing factors to Liberia’s performance under the ECF program and the Millennium Challenge Corporation, which have brought significant financial resources to the country through external budget support to the Government, in addition to promoting macroeconomic stability, economic growth and sustainable economic development.
CBL Concerned Over Non-Performing Loans
Addressing the gathering of media professionals and guest at the PAL induction ceremony, Governor Tarlue used the occasion to raise serious alarm over borrowers who continue to default on their loan payments, terming such tendency as unfair.
“Let me also use this time to speak to the issue of high level of Non-Performing Loans (NPLs) in the banking system due to the non-compliant posture of some delinquent borrowers to settle their obligations to the commercial banks. While the CBL is aware of the impact factors such as EBOLA and Covid-19 on some businesses, this cannot be an alright excuse for people not to settle their obligations, especially when they have the means to do so. It is important to understand that the monies commercial banks give as loans are other people’s monies (the depositors and other creditors). If people can’t pay on their loans, it will affect financial intermediation because banks will be reluctant or selective in granting loans to the private sector and this is not good for the economy.
“The CBL is seriously concerned about this situation. We recently issued a press release to this effect and wants to urge individuals and businesses once again in this category to engage their commercial banks to work out modalities to either restructure or commence payment on their outstanding obligations. The CBL has given up to the end of the first quarter of 2023 to all non-compliant delinquent borrowers to improve their delinquent or risk several supervisory sanctions, including restriction to access banking services until they can settle on their obligations. You cannot benefit from a system, while at the same time undermining the same system. This is unfair!” Governor Tarlue cautioned.
CBL and Media Relationship
Without mincing words, Governor Tarlue acknowledged the role of the media with regards to the gains achieved by his administration, for which he urged the new PAL leadership to join the CBL in ensuring the upward mobility of the Bank’s functions.
“With these remarks about the CBL, let me now come to the main purpose of our gathering here today, which has to do with the great job the media community, and particularly the PAL, is doing in promoting not only our democratic system, but also free market system.
“As I mentioned earlier, we could not have achieved the level of public credibility and trust we have without the media. Given the critical role of the media in our rebranding process, one of the first steps we took was to strengthen the capacity of our Communication Section to build a new partnership with the media community.
“We also established a formal media engagement program with the Liberia Broadcasting System (LBS) through our famous ‘Money Matters’ program and continue to patronize several newspapers in the country. We also continue to hold regular engagements with media executives on major and important developments about the CBL. I want to publicly state that these engagements have been remarkable and rewarding. We must commend you for this.
“The media has played an important role in the currency reform project, not only for educating the population on the new currency but also in managing public expectation. You continue to play a key role in disseminating our monetary policy decisions, which marked a significant transformation in our monetary policy formulation, transparency and accountability to the public, the business community, policymakers, and our external partners.
“Distinguished ladies and gentlemen, as we all know access to information is an essential element of democracy and free market economy, which Liberia ascribes to. In this regard, accurate, fair, and balance reporting are important elements of the media ethics. You know this better than I do. This is important because it helps to provide full information to the public in not only understanding issues but making the right judgement about those issues, which directly or indirectly affect their lives.
“I must say that many of you have exhibited and uphold these ethical standards. We, most often, see sensational publications from some papers which are sometimes not substantiated before publication. This is not peculiar to Liberia. The CBL itself is a victim of these sensational publications. As a professional institution, we have always managed our reactions to these publications, bearing in mind that we have nothing to hide. However, we believe that fact-checking should be the first ‘rule of engagement’ because this is good for the integrity and credibility of the media community itself.
“As we discussed about media ethics, the role of social media raises a specific challenge due to technological advancement. Compared to traditional media, social media has a larger reach, is easily accessible, enables mass participation in public discussions and provides instant information. Notwithstanding its positive impact, social media has most often been misused, thus causing negative impact on society. While it may be difficult if not impossible to stop this technological advancement, the need for some ethical standards to govern these activities is important,” Governor Tarlue indicated.
Those inducted included Othello Garblah, Publisher of New Dawn Newspaper, President; Sam O. Dean, Publisher of Independent Newspaper, Vice President and Abraham Ansumana Donzo, Publisher of Public Agenda, Financial Secretary.