By Senator Amara Konneh (former Finance Minister)
Okay, it is a new week, and something unusual is happening in the Liberian economy. Yesterday, I visited a few weekend markets to gain insight into the persistence of high consumer prices, even with recent enhancements in both inflation and exchange rate metrics. My findings underscore a complicated set of structural and behavioral elements that are hindering the governmentโs efforts to achieve significant price relief for Liberians.
Governor Henry Samoa and the Central Bank of Liberia have made tremendous progress in stabilizing two key economic indicators: inflation and the exchange rate. For example, the value of the Liberian dollar has improved against the US dollar, and inflation has significantly decreased from 13.1% in February 2025 to 7.4% in July 2025 (see attached charts). However, these encouraging developments have not yet led to substantial drops in prices at the market level. This raises several key considerations that require further examination:
- ๐๐๐ง๐๐จ๐ซ ๐๐๐ก๐๐ฏ๐ข๐จ๐ซ ๐๐ง๐ ๐๐ซ๐ข๐๐ ๐๐ข๐ ๐ข๐๐ข๐ญ๐ฒ: Numerous vendors are reluctant to decrease prices. This phenomenon, referred to as “price stickiness,” suggests that prices may rise quickly but tend to fall more slowly. Moreover, vendors are voicing concerns regarding the sustainability of improvements in the exchange rate and the long-term stability of the Liberian dollar.
- ๐๐ข๐ ๐ก๐ญ ๐๐จ๐ง๐๐ญ๐๐ซ๐ฒ ๐๐จ๐ฅ๐ข๐๐ฒ: The Central Bank has upheld a Monetary Policy Rate of 17.25 percent, causing the cost of borrowing for trade financing to remain high, and has sterilized over L$13 billion to stabilize the foreign exchange market. Moreover, the CBL reports that remittance inflows reached US$425.9 million in the first half of 2025, suggesting more US dollars in the financial system.
- ๐๐ง๐ฏ๐๐ง๐ญ๐จ๐ซ๐ฒ ๐๐๐ : We have yet to witness the anticipated price drop to $14 per bag for crucial goods like rice, as announced by President Boakai. Importers are still depleting older inventory bought at higher prices, which delays the advantages of recent policy changes.
- ๐๐ญ๐ซ๐ฎ๐๐ญ๐ฎ๐ซ๐๐ฅ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐๐ข๐ง๐ญ๐ฌ: Liberiaโs dependency on imported goods and seasonal transportation obstaclesโespecially during the rainy seasonโcontinue to disrupt supply chains and keep prices from going down. My office staff collected the prices of selected commodities for sample markets in Western LiberiaโBomi, Cape Mount, and Gbarpolu.
- ๐๐๐ซ๐ ๐ ๐๐ง๐๐จ๐ซ๐ฆ๐๐ฅ ๐๐๐๐ญ๐จ๐ซ ๐๐ฒ๐ง๐๐ฆ๐ข๐๐ฌ: With over 80% of economic activity in the informal sector, enforcing pricing regulations and tax compliance becomes difficult, further complicating market behavior.
These factors create a complicated dynamic between consumers eager for relief and vendors wary of lowering prices due to fears of potential losses. This scenario leads to a market that resists the adjustments we anticipate; even as macroeconomic indicators suggest a change should take place.
This raises a significant question for policymakers: Should the government adopt more proactive strategies to stabilize prices and promote reductions, or would allowing the market to adjust gradually on its own prove more effective?
To tackle these inquiries, I have requested that my Senate colleaguesโparticularly the Committees on Banking and Currency, Ways and Means, and Commerceโengage with the Central Bank of Liberia, the Ministry of Commerce, and the Ministry of Finance and Development Planning for an in-depth discussion on this topic. I am a member of the Banking and Currency Committee. Although we are currently on recess, the urgency of this issue necessitates proactive engagement.
This conversation is vital for supporting President Boakaiโs price reduction initiative and ensuring it is grounded in sound economic principles that produce tangible benefits for consumers and businesses. Through coordinated efforts and structural reforms, we can realize the full potential of our macroeconomic improvements and restore confidence in Liberiaโs marketplace.
Chart sources:
- Inflation and exchange rate – CBL
- Survey of select markets in Western Liberia: Senator Konnehโs office staff
