This edition’s Letter from the Top, like its predecessors, contains hard-hitting news and anecdotes that will prick the most hardened conscience. “On June 3, 2015, the Ministry of Finance and Development Planning released a Fiscal Measure Circular announcing that as of June and running to the end of the FY 2014/2015, the Government of Liberia would pay some of its allotments to all spending agencies (Ministries, Autonomous Agencies and Corporations, etc.) 50% in Liberian dollars and 50% in US dollars. Among the budgetary items which this extraordinary measure would affect is salary or honorarium. Strangely, the Fiscal Measure Circular does not say why the Ministry of Finance and Development Planning is introducing this policy that obviously touches raw nerves of government operations.
In the absence of supportive reasons for the policy, the omission opens a gale of speculations. Some pundits claim that the fiscal measure is an austerity policy intended to salvage yet another looming budgetary shortfall. On this plank, they postulate that there could be a sharp revenue generation gap as a result of the outbreak of Ebola and a steep drop in export earnings on iron ore and rubber on the global market. On the same plane of analysis, this school of thought proffers that there might have been an abrupt closure of windows at the instant burrowing outlet of international financiers.
Others say the fiscal measure might well be an inscrutable attempt to stabilize the Liberian dollar against the US dollar. But how could this be? From our perspective, the measure seems to be culled from textbooks on financial crisis management that anchors on the supply-side of currencies. Whatever the case might be, withholding U.S. dollars while releasing more Liberian dollars in the open market will directly weaken the local currency and lead to inflation.
From this perspective, one does not have to be an economic wizard to realize that tough times are here. What is more grievous, however, is the failure of financial managers to give the public adequate notice on the fiscal measure. From the look of things, the magnitude of surprise over the fiscal measure will certainly exacerbate the micro effects on the fragile economy.
Here, the media must share the blame. As important as this breaking news seems, the watchdogs of society -the usually robust dailies and electronic media have not given it deserving space and prominence. Perhaps, this omission is inadvertent. Or could it be that the media for once have been overwhelmed by the litany of surreptitious news of austerity and mixed signals emanating from the MFDP in recent times? Of late, the Liberian media have been inundated with news of budgetary constraints and attempts to reshape and bring sense into it. In journalistic parlance, this might have heralded the ‘silly season’.
However, in the aftermath of the Ebola crisis, and while alarm bells are still ringing, the media cannot afford to be caught napping. The watchdogs of society should treat the heralded fiscal measure with alacrity because it is likely to dim the socio-economic ambience of the country and have grave implications for the wider society. Media practitioners cannot deny that on the short-term, tinkering with allotments, especially salaries for public servants, could inflame sensitive nerves. For example, there is the problem of those who have outstanding transactions. Debtors will find it very difficult to meet their obligations.
At best, they must revert to renegotiating the agreements; pay more to their creditors at the existing Central Bank rate or default at the risk of litigations. The public most also brace for the security risk of carrying large volumes of Liberian dollars in Ghana-Must-Go bags from the banks and unto the market. It is a known fact that the government has been grappling with the complications of using dual currencies.
While it seems fashionable to use the local currency because the government might have monopoly control over it, it is important to understudy the raison d’être for previous administrations maintaining the dual currency. At this material time, when export earners are plummeting like ashes, removing the U.S. dollars from the market would be tantamount to striping off the economic cushion. On the other hand, to pass on the buck or adverse effects of maintaining the dual currency to the civil servants is neither a viable option”.