Monrovia, Liberia – The Central Bank of Liberia (CBL) has announced the retention of its Monetary Policy Rate (MPR) at 17.0 percent to ensure continued financial stability. The decision, disclosed by CBL Executive Governor Henry F. Saamoi, follows a comprehensive review of global and domestic economic trends by the Monetary Policy Committee (MPC).
Governor Saamoi also confirmed that the reserve requirement ratios for the Liberian dollar and US dollar would remain at 25 percent and 10 percent, respectively. Additionally, the Bank has reintroduced a corridor system, with the Standing Credit Facility set at the upper band of MPR plus 2.5 percentage points and the Standing Deposit Facility at the lower band of MPR minus 7.5 percentage points.
The country’s real GDP growth has slowed significantly despite fiscal injections and measures to curb inflation. Real GDP growth moderated to 1.7 percent in the fourth quarter of 2024, down from 5.3 percent in the first quarter of 2023. The MPC anticipates similar trends in the first quarter of 2025 due to businesses replenishing depleted inventories from the festive season.
Inflation remains a concern, with consumer prices rising by 8.7 percent in the fourth quarter of 2024, compared to 5.9 percent in the previous quarter. The MPC forecasts inflation to increase to 10.3 percent in early 2025, primarily driven by domestic food price hikes. The banking sector also faced challenges, with total assets, deposits, and loans declining. However, non-performing loans saw a slight reduction but remained above the acceptable threshold of 10 percent.
The government’s fiscal operations injected L$13.2 billion and US$37.4 million into the economy in the fourth quarter, supporting gradual de-dollarization efforts. Despite this fiscal stimulus, the MPC noted a contraction in fiscal impulse, which dropped from 1.7 percent to 3.0 percent of GDP in the final quarter of 2024. Exchange rate stability has been a positive development, with the Liberian dollar appreciating against the U.S dollar by 4.46 percent, supported by increased remittances and stringent monetary policies.
However, the country’s trade deficit widened, rising from US$35.2 million to US$67.1 million due to increased import payments. Liberia’s gross international reserves also declined, now covering only 2.8 months of import requirements, down from 3.1 months in the previous quarter.
Globally, economic growth slowed slightly, declining from 3.3 percent in 2023 to an estimated 3.2 percent in 2024. Global inflation is projected to decrease from 6.7 percent in 2023 to 5.8 percent in 2024, although sub-Saharan Africa experienced an inflation surge to 18.1 percent due to rising food prices and agricultural challenges.
Governor Saamoi highlighted risks of further economic downturns, including potential slowing growth in China and escalating conflicts such as the Russia-Ukraine war and the Israel-Hamas conflict, which could dampen global economic momentum and heighten inflationary pressures.
In his concluding remarks, Saamoi reaffirmed the MPC’s commitment to closely monitoring both domestic and international economic conditions. He emphasized the Central Bank’s focus on financial stability, inflation control, and fostering sustainable growth to navigate Liberia through local and global challenges. The Bank’s gradual de-dollarization efforts underscore its determination to build a resilient economy that can withstand economic uncertainties.
