Patray retires from Liberia governorship

Embattled governor hands over leadership to deputy as country strikes IMF deal
The Central Bank of Liberia
Jefferson Krua / Wikimedia

The governor of the Central Bank of Liberia retired at the end of October, handing the reins of the institution to a deputy until a permanent replacement can be found.

The departure comes as Liberia struck a deal with the International Monetary Fund to unlock a support package.

Nathaniel Patray III left the central bank after president George Weah announced in May 2019 that the governor would be stepping down due to “scheduled age-related mandatory retirement”.

In a statement published at the end of October, Patray announced that “in keeping with an arrangement with the president and a resolution approved by the board of governors of the bank”, he would be handing over the governorship.

While retirement appears to be the official reason provided by the central bank, a statement from the president’s office stated Weah had accepted the governor’s “resignation”.

“His resignation followed president Weah’s recent pronouncement that he would restructure the central bank of Liberia towards tackling the country’s economic challenges,” the statement said.

A process has begun to find his replacement but in the interim, deputy governor Musa Dukuly has been appointed as acting governor.

In recent months, the Central Bank of Liberia has been rocked by scandal over alleged irregularities in its operations. In July 2018, Weah ordered a $25 million injection into the economy to mop up excess currency. However, an investigation made by the state auditor found only $17 million was used.

In addition, a probe was launched into the supposed disappearance of more than $100 million in cash that was printed abroad. The probe seemed to show no money was missing, but there were lapses in the accuracy and completeness of the central bank’s records.

Speaking in May 2019, president Weah said this incident pointed to “a major lapse of controls at the central bank” and “called into question the ability of its present leadership to effectively revamp its internal mechanism to provide greater accountability and professionalism”.

Several central bank officials were arrested in connection with the banknote affair. They have pleaded ‘not guilty’ to criminal charges.

Patray was appointed to the role of governor in 2018 following the resignation of Milton Weeks. During his time as governor, he was commended with strengthening the foreign exchange auction system and establishing a national financial inclusion strategy. 

“We will remember your exuberant effort exerted to get Liberia back into the IMF programme, and leading the process of the amendment of the CBL Act to strengthen governance of the Bank and the financial sector,” Dukuly said on Patray’s departure.

Holding the fort

Dukuly, deputy governor for economic policy, said there was a “difficult task ahead” in the monetary sector of the country, and staff would need to remain “more committed and dedicated in the performance of their duties”. 

He called “for sacrifice, concerted engagement and more collaboration as the bank endeavours to tackle the numerous challenges affecting its operations, including plans of entry into the IMF programme”.

On October 29, Liberia signed a new deal with the IMF that will see an economic and financial reform programme implemented in exchange for an extended credit facility.

Liberia faces a challenging outlook. In an IMF report issued in June 2019, fund directors agreed the central bank would need to “tighten policy with the objective of reducing inflation to single digits by 2021”. Inflation rose from 13.1% in November 2017 to 29.9% in July.

The directors also advised the central bank to cease the issuance of central bank bills until the cost of the operation is included in the government budget – a key concern for the IMF. Once the government’s funding gap is closed, without central bank financing, issuance of the bills can resume.

Country on the brink

Over the past five years, Liberia’s economy has floundered, with an extensive outbreak of Ebola adding to the nation’s problems.

In the past 12 months, the Liberian dollar has depreciated over 25%, from 157 per US$1 to 212.

In July this year, the central bank announced it was making a transition from an exchange rate targeting framework to an interest rate-based framework.

The exchange rate targeting policy involved keeping the exchange rate broadly stable in the short term, because of the significant impact of Liberian dollar depreciation on domestic prices.

However, in the wake of low inflows of foreign exchange into the country, maintaining a high level of foreign exchange reserves has become difficult.

The current high prices of some goods, especially food, is significantly affecting poorer people, something the central bank has committed to reducing moving forward.

Earlier this year, the IMF forecast growth would fall from 4.7% in 2018, to 0.4% in 2019.

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