MONROVIA, Dec. 30 (Xinhua) -- The Central Bank of Liberia (CBL) has introduced stringent measures to alleviate the impact of the Ebola crisis on both the banking system and the economy in general, the bank's executive governor said here Tuesday.
Liberia, the country worse hit by Ebola, has suffered huge economic losses as the epidemic hit agriculture, business and school system. According to a World Bank report released in December, Ebola would cost 2 billion U.S. dollars across the region, tilting the economy to the edge of shrinking.
"Projections show that growth of the economy, which was expected to average 6.6 percent over the next three years before Ebola epidemic, is now expected to slow down to only about 1 percent," CBL Governor Mills Jones said.
Among measures announced by Jones, the central bank will pay off the outstanding loan obligations from kindergarten through high school, as prolonged school closure due to Ebola increased debt burden on private schools that borrowed from banks.
"This intervention serves two purposes: it helps to relieve the banks of the burden of re-provisioning, where the schools find themselves unable to repay the debts," Jones said in a statement Tuesday.
"It (also) helps to relieve the potential burden on parents who may already be experiencing financial difficulties from increased fees that schools may have to impose in order to meet the banks' obligation," he said.
Meanwhile, the repayment period to the central bank for all participating banks that received funds associated with CBL's various stimulus initiatives will be extended by two years, and the interest rate reduced from 3 percent to 2 percent as a means of reducing the financial burden of the crisis on banks, Jones said.
"As additional support to commercial banks, the interest on the CBL's initiatives for the period of the Ebola crisis will also be waived," Jones said in a statement.
The measures are part of the country's efforts to cushion the impact of Ebola which has cost its economy dearly. According to Jones, the banking sector recorded decline in key balance sheet indicators.
"Total assets which have been on the rise declined by 2.7 percent between June and October, 2014; total deposits by 2.8 percent; total loans and advances by 7.2 percent; and total capital by 4.2 percent during same period," Jones said.
To reverse the rate of depreciation of the Liberian dollar during the first half of 2014, the central bank pumped in 30 million dollars as part of its intervention strategy to stabilize the foreign exchange market and help contain inflation.
These moves have proven effective, Jones said. "In fact the exchange rate has appreciated by 10.8 percent to 82.5 Liberian dollars to 1 U.S. dollar at the end of November, from 92.5 Liberian dollars to 1 U.S. dollar at end of first week in July 2014 before CBL increase intervention while inflation stood at 7.9 percent end of November, 2014."
The governor also warned of structural weakness in the economy, which saw rising unemployment and poverty.
"Even as we take short-term measures to stabilize the economy, we should look beyond just recovery, which could leave the economy with the same vulnerabilities that we are now experiencing, making the country susceptible to a vicious circle of poverty and under- development."
The central bank is working with "partners to mobilize financial resources to support critical sectors of the economy, such as agriculture, manufacturing and small and medium size enterprises," he said.
Meanwhile, the CBL is "adopting a more robust monitoring system over the banking industry to ensure that systemic problems arising from the sector are addressed on a timely basis," he added.
