By Festus Poquie
Liberia won’t immediately join a planned West African single-currency regime, Central Bank Governor Henry Saamoi said, citing the risks of moving too quickly from the country’s dual-currency system to the proposed ECO.
The Economic Community of West African States (ECOWAS), has set 2027 as a target for launching the ECO – a common currency intended to deepen monetary and economic integration across the region.
Liberia, however, needs more time to prepare its economy before participating, Saamoi said Tuesday in the capital Monrovia when he announced the Monetary policy rate will be kept at 16% until Jan. next year.
Liberia currently operates a dual-currency system in which the Liberian dollar and U.S. dollar are both legal tender. Saamoi said the central bank must first reduce the economy’s reliance on the U.S. dollar through a gradual process of dedollarization.
“It will take a little while for Liberia to join,” Saamoi said. “We have to make sure we get the fundamentals of our economy right before we join.”
A team at the central bank is working on a dedollarization strategy, which will be implemented gradually to limit the risk of a sharp increase in prices, he said.
“The productive capacity of our economy has to be strengthened before we dedollarize,” Saamoi said. “If we do not get the fundamentals right, inflation will get very high.”
