MONROVIA – Since the World Bank in 2023 hinted the rebound of the Liberian economy with the growth rate of 4.7 percent, there continues to be spiral progress even after the ominous electoral year. Now the Central Bank of Liberia, which manages the monetary sector of the country, has been reporting the stability of the economy, stating there is an impressive 4.8 percent expansion in 2024, and that “looking ahead, the government’s ARREST Agenda under the national development plan is expected to bolster growth, with projections suggesting a 5.6% expansion in 2025”. As The Analyst reports, the CBL asserts that “key drivers include the continued expansion of electricity coverage, rural road improvements, enhanced social programs, and coordinated monetary and fiscal policies”.
Government’s monetary arm, the Central Bank of Liberia, has released its third quarter report indicating that the economy of the country is on “stable course with mixed sectoral performance.”
The CBL disclosed that the economy remains poised for growth, with estimate indicating a 4.8% expansion in 2024, a 0.2 percentage point improvement from the previous year – a performance underpinned by robust activities in the primary sector, notably agriculture and fisheries, driven by increased production of domestic rice, rubber, and cassava.
According to the CBL quarterly bulletins, the economy’s three key sectors—primary, secondary, and tertiary—exhibited mixed growth performances throughout the year, the first and second quarters seeing growth in most major commodities, while the third quarter showed moderation in several areas.
However, the monetary regulatory agency noted that the overall performance across the three quarters suggests a positive trajectory, supporting the attainment of the 4.8% growth target, surpassing the 4.6% achieved in 2023.
Inflation has also been effectively contained, with CBL interventions ensuring single-digit rates, the CBL noted, adding that inflation was recorded at 7.4% in the second quarter and 6.8% in the third quarter, with projections for the fourth quarter remaining stable at 7.6%.
The moderation in inflation, it states, has been attributed to lower inflation in categories such as clothing, furnishings, health, transport, and education.
Looking ahead, the CBL said, the government’s ARREST Agenda under the national development plan is expected to bolster growth, with projections suggesting a 5.6% expansion in 2025.
Key drivers include the continued expansion of electricity coverage, rural road improvements, enhanced social programs, and coordinated monetary and fiscal policies, the Bank reported, adding
however, that potential risks to this positive outlook remain.
Global conflicts, the CBL emphasized, such as the Russia-Ukraine war and the Israel-Hamas crisis, unfavorable commodity price trends, a possible global pandemic resurgence, and weak global economic growth could pose challenges to Liberia’s economic stability.
But despite these uncertainties, the Bank assured that Liberia’s economy is showing resilience, with efforts to sustain growth and maintain inflation within single-digit limits offering a promising outlook for the medium term.
Proactive Monetary Policy and stable financial system boost confidence
The CBL says it continues to strengthen public confidence through its proactive monetary policies and commitment to maintaining a stable financial system. Since shifting from exchange rate targeting to an interest rate-based monetary policy framework, the Bank has successfully managed Liberian dollar liquidity, yielding positive outcomes such as safeguarding foreign reserves and mitigating inflationary pressures.
In a significant move to sustain economic stability, the CBL Monetary Policy Committee said it has adjusted the policy rate from 20% in the first and second quarters of 2024 to 17.5% in the third quarter and 17% in the fourth quarter.
These adjustments have further help stabilized the Liberian dollar and bolstered trust in the domestic currency, the Bank further reported, as recent trends show an increased use of the Liberian dollar in business transactions, reflecting growing public confidence in the CBL’s monetary policy strategies.
Supporting Private Sector Growth
The CBL also reported that its policies are also deepening financial intermediation and supporting private sector growth such that by October 2024, credit to the private sector rose to 11.0% of GDP, driven by credit allocations to various sectors.
Loans and advances are mainly concentrated in five (5) sectors: trade (28.6 percent); personal (16.6 percent); service (15.1 percent); oil & gas (8.3 percent); and construction (6.8 percent) of total loans and advances.
Under the Liberia Investment Finance and Trade (LIFT) project, the CBL secured a US$6.0 million Line of Credit (LOC) from the World Bank to provide affordable financing to Micro, Small, and Medium Enterprises (MSMEs).
Disbursements began in October 2024 through commercial banks and financial institutions, channeling funds into MSMEs, which have strong potential for growth and job creation. Looking forward, the ARREST Agenda (2025–2029) is expected to further align the CBL’s policies to enhance financial intermediation to boost agricultural productivity, promote value addition, and contain food inflation.
Financial sector expanding with stability of the banking system
CBL further reports that Liberia’s banking sector continues to show resilience and growth, with nine commercial banks, three deposit-taking microfinance institutions, 12 rural community finance institutions, six fintech companies, and two mobile money operators currently operating in the country. In 2024, the CBL received two new applications for banking licenses, reflecting increased investor interest in the financial sector.
While the number of non-deposit-taking microfinance institutions declined from 22 to 17, foreign exchange bureaus grew from 253 to 261, and remittance entities increased from 53 to 59. The CBL also issued two final licenses and five provisional licenses to non-bank microfinance entities, while revoking seven licenses for non-compliance with the Financial Institutions Act of 1999.
With the onset of heightened festive-season demand in October 2024, the CBL reinforced its regulatory oversight to ensure the sector remains strong, stable, and liquid. Despite challenges such as high non-performing loans (NPLs), the CBL’s quarterly bulletins indicate that banks remain profitable and compliant with capital adequacy and liquidity ratios.
As of the end of October 2024, total (i.e. the amount in USD converted into Liberian dollar and added to the Liberian dollar deposit) deposits in the banking system exceeded 200 billion Liberian dollars, and profit after tax stood at an estimated 7 billion Liberian dollars, underscoring the sector’s robust performance and ability to meet public demand for efficient banking services.
Positive Developments in the External Sector
Amid geopolitical tensions, Liberia’s external sector showed notable improvement during August to October 2024.
Trade Deficit narrowed to $47.9 million as at end October 2024, from $134.3 million recorded in the second quarter. Gross International Reserves increased by 2.3%, with Net International Reserves (NIR) growing by 7.7% by the end of the third quarter, though still below the benchmark of 3 months of import coverage.
Net Remittance Inflows rose by an estimated 14.7% during the period. Liberian Dollar Performance: The currency appreciated by 1.8% (end-period) and 0.1% (period average) as of October 2024, signaling effective monetary policy and liquidity management by the CBL.
The CBL is committed to rebuilding the country’s international reserves to cover 3.5 months of imports in the medium term.
CBL Operational Efficiency: CBL Streamlined Staffing requirements
Human Resources Management
In September 2024, the current management took a decisive action to reduce the unsustainable personnel cost by streamlining personnel requirements. This resulted in a legal termination of prolong contracting engagements with various individuals at the Bank.
To reduce the emotional impact of the disengagement exercise, the CBL management instituted a proactive communication strategy to help manage the situation. The process was conducted with high degree of transparency thereby ensuring credibility.
Status of implementation of recommendations of the GAC Compliance Audit
The GAC Compliance Audit raised 28 audit issues with 71 findings, resulting into a total of 117 audit recommendations. As of the end of October 2024, 55% of the audit recommendations have been implemented and resolved, 35% ongoing and 10% unresolved. Management has developed a Tracker to monitor the timely implementation of all the recommendations. A periodic reporting is required by all responsible parties.
Some immediate Policy Actions Taken
In response to addressing some of the immediate actionable issues raised in the GAC compliance audit, the CBL has drafted an Over-the-Counter Check Encashment Policy, shared and agreed the draft with the MFDP.
The policy is intended to limit the amount that an entity or individual can encash over the counter at one time. The current threshold is US$25,000.00 or its equivalent in LRD to an identified employee of Ministries and Agencies of Government and US$5,000.00 or equivalent in LRD to individuals per day, howbeit with exception to national security operations.
There will be no cashing of multiple checks over the counters by any individual on a single day. The CBL has signed a Service Level Agreement with the MFDP, outlining the various services carried out by the CBL for the government. The finalized policy will be transmitted to the MFDP for distribution with the MACs.
“Defaulted Staff Loan”
The CBL Management has commissioned an exercise to review all loans granted to both current and staff that are no longer in the employed of the CBL. The exercise is intended to determine the amount that could be recoverable using remedial actions. For those granted to staff who are no longer in the employ of the Bank and for which there are no collaterals, management has resolved to write-off those facilities.
Taking Steps to Combat Fraud
In August 2024, the new management encountered a fraud incident that would have deprived the government of US$961,777.15, perpetuated through collusion by three (3) staff members. As part of initial efforts to curb reoccurrence of the incident, the CBL has developed a policy on transactions threshold to set limits for various users of the system for full implementation. Management has commissioned a full System Audit which is currently ongoing.
Currency Reform: Printing, Delivery and Infusion
All the banknotes approved for printing totaling $47.0645 billion have been printed and delivered, of which L$32.562 billion banknotes representing 69% has been infused as at November 26, 2024. Similarly, all the coins totaling L$1.6695 billion approved for minting have been minted and delivered, of which L$382.92 million representing 28.5% has been issued as at November 26, 2024.
Medium Term direction for the Bank
The current CBL Management is far advanced in the development of a five-year strategic plan (2025-2029) which is expected to be aligned with the National Development Plan. The plan will enhance internal reforms, including an amendment of the CBL Act, digitization of the bank, full decentralization by operationalizing cash centers in selected regions of the country, de-dollarization for increased use of LRD, adherence to standard recruitment policy based on competency, and fully address the GAC recommendations and IMF safeguards assessment recommendations.
In addition, the CBL is anticipated to amend and restate the New Financial Institution Act of 1999, which is now before the National Legislature for ratification with the aim of enhancing the regulatory framework for licensing, supervision, and resolution of banks and financial institutions and the creation of a Deposit Insurance Scheme.
CBL Overall Evaluation/Assessment
The CBL has been instrumental in maintaining economic stability in 2024 through effective monetary policies and strong regulatory oversight. Its interest rate-based monetary policy has enhanced liquidity management, curbed inflation to single-digit levels, and stabilized the Liberian dollar. Adjustments to the monetary policy rate—from 20% to 17%—further solidified public trust and demonstrated the Bank’s responsiveness to changing economic conditions.
In the banking sector, the CBL ensured stability and profitability despite high non-performing loans (NPLs). Total deposits exceeded L$200 billion by October 2024, and post-tax profits in the banking system stood at L$7 billion, reflecting resilience in the financial system. Efforts to promote financial inclusion, such as the US$6 million World Bank credit line for MSMEs, and reforms in licensing and compliance, have strengthened the sector and boosted private sector growth.
Amid global geopolitical challenges, the CBL’s management of the external sector has been commendable. The trade deficit narrowed, remittance inflows increased by 14.7%, and the Liberian dollar appreciated slightly, supported by effective monetary policies. However, international reserves remain below the benchmark for import coverage, highlighting the need for further progress in this area. Overall, the CBL has demonstrated strong performance in stabilizing the economy and fostering growth.
Operationally, the CBL has taken decisive actions to reduce the unsustainable personnel cost, resolve countable audit recommendations, and manage the currency reform with the aim of enhancing operational efficiency.
