Published: July 24, 2025
MONROVIA – The Central Bank of Liberia (CBL) has maintained its Monetary Policy Rate (MPR) at 17.25 percent, citing solid second-quarter growth and slowing inflation, but warning that falling prices for key export commodities threaten the country’s economic momentum.
“Our economy expanded by 4.3 percent in the second quarter, and inflation slowed to 11.1 percent. But we are closely watching the global downturn in the prices of our key exports like rubber, cocoa, and palm oil,” Executive Governor Henry F. Saamoi announced Wednesday during the reading of the Central Bank’s Monetary Policy Committee (MPC) Communiqué in Monrovia.
The high-level briefing, held at the CBL’s headquarters, drew a broad spectrum of participants — including Finance and Development Planning Minister Augustine K. Ngafuan, members of the Bankers Association of Liberia, the Liberia Business Association (LIBA), the Liberia Marketing Association (LMA), the Yana Boys Association, and other civil society groups.
Stakeholders Applaud Transparency
Governor Saamoi received loud applause for making the policy process more transparent and participatory.
“This is the first time we are witnessing such inclusiveness,” said a marketer in attendance. “This affects all of us — prices in the market, the exchange rate, the way we live.”
Finance Minister Ngafuan praised Governor Saamoi for his level of transparency and inclusiveness in the conduct of monetary policy, calling it a “refreshing shift” in stakeholder engagement. He emphasized that the Ministry of Finance would continue to work collaboratively with the Central Bank to improve the country’s economy through coordinated fiscal and monetary reforms.
Domestic Growth Holds, Inflation Eases
Liberia’s economy is projected to grow 5.6 percent by year-end, a forecast the MPC said remains within reach due to strong Q2 performance and improving price stability.
“The 4.3 percent expansion in economic activity, compared to 3.9 percent in the previous quarter, is a signal of resilience,” Saamoi said. “The moderation in inflation is largely due to declining food prices and reduced price pressures in both regulated and market-driven goods.”
Specifically, the MPC reported that food inflation decreased from 8.4 percent to 8.3 percent, administered prices fell from 1.2 percent to 0.7 percent, and market inflation moderated from 2.9 percent to 2.4 percent. The projected inflation for Q3 stands at 10.3 percent, plus or minus two percentage points.
While encouraged by the trend, Saamoi cautioned that “global economic uncertainty, particularly the decline in the prices of our major exports, could undermine this progress.”
External Risks Mount
The CBL warned that Liberia’s heavy reliance on raw commodity exports leaves the country vulnerable to fluctuations in international prices. Rubber, cocoa, palm oil, and iron ore — all critical to Liberia’s foreign exchange earnings — are projected to decline in global value.
“While we welcome the global moderation in headline inflation, the downside risks are real. A decline in the prices of our export commodities will hurt our trade balance and strain the Liberian dollar,” the Governor noted.
The trade deficit widened by 35.9 percent during the second quarter — equivalent to 3.8 percent of GDP — driven by a 23.4 percent increase in import payments despite a 19.2 percent rise in export receipts.
Gross International Reserves grew slightly to US$537.2 million. Still, import cover dropped to 2.1 months, well below the regional benchmark of three months.
Remittances Offer a Buffer
Amid the export volatility, rising remittances provided a cushion for Liberia’s balance of payments and exchange rate. The CBL reported an 11.4 percent increase in net personal remittance inflows — including those sent to mobile money wallets — reaching US$236.5 million, or 4.6 percent of GDP.
“These inflows helped ease pressure on the Liberian dollar and supported exchange rate stability,” Saamoi said.
Indeed, the Liberian dollar remained broadly stable against the U.S. dollar throughout the quarter, providing a sense of security even as global economic divergence and climate-related supply shocks roiled many other currencies in the region.
Banking Sector Stable, but NPLs Rising
On the financial sector front, the CBL reported that commercial banks remained broadly stable, capitalized, and liquid. The capital adequacy ratio reached an estimated 31.5 percent — more than three times the regulatory threshold of 10 percent — with increases also observed in total assets, deposits, and loans.
However, the rising level of non-performing loans (NPLs) remains a key concern. “NPLs exceeded the tolerable limit by 16.7 percentage points,” Saamoi said. “We are hopeful that our recently implemented NPL Resolution Framework will begin to reduce these risks.”
The MPC emphasized that while liquidity levels remain adequate, close monitoring is needed, particularly as the festive season approaches and consumer spending patterns shift.
Financial Markets and Monetary Instruments
The MPC highlighted stronger performance in financial markets, including increased investor confidence in CBL-issued bills.
“There was a 6.0 percent rise in CBL bills issuance, driven by a 7.0 percent increase in institutional investor subscriptions,” the Governor said. “Although retail investments declined by 4.0 percent, we expect this to rebound after the festive period.”
The Bank’s monetary operations also recorded 15 interbank swap transactions totaling US$32.55 million, and eight placements valued at US$3.74 million — moves seen as critical for enhancing liquidity and improving monetary policy transmission.
Net domestic assets (NDA) rose by 7.3 percent, reflecting a 12.9 percent growth in net domestic credit. Currency in circulation increased by 2.6 percent to L$35.1 billion.
“These developments are consistent with a stable macroeconomic environment,” Saamoi explained. “We are seeing stronger alignment between policy instruments and real market behavior.”
Fiscal Developments: Liquidity Without Distortion
Fiscal data from the second quarter show that the Government of Liberia made net injections of liquidity in both U.S. and Liberian dollars. However, Saamoi clarified that these injections “did not distort economic stability.”
“The fiscal impulse was slightly negative at -0.14 percent of GDP, despite an expansionary stance of 2.1 percent of GDP,” he said. “Debt repayments helped contain exchange rate and inflationary pressure.”
MPC Decision: Stay the Course
After its July 16 meeting, the MPC unanimously agreed to:
– Maintain the Monetary Policy Rate at 17.25 percent;
– Retain the corridor of +2.5 and -7.5 percentage points around the MPR for the Standing Credit and Standing Deposit Facilities; and
– Keep reserve requirement ratios at 25 percent and 10 percent for Liberian and U.S. dollar deposits, respectively.
“These decisions reflect our determination to manage inflation expectations while supporting domestic growth,” Saamoi declared. “We will act swiftly and decisively in the event of unexpected economic shocks.”
Inclusive Central Banking for a Volatile Future
The Communiqué reading and stakeholder forum were hailed as a turning point in how monetary policy is communicated in Liberia. From bankers and business leaders to marketers and street vendors, attendees praised the CBL’s inclusive approach.
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