MONROVIA – The Central Bank of Liberia (CBL) has maintained its monetary policy rate at 16.25 percent, citing persistent risks in the financial sector—particularly the continued challenge of non-performing loans (NPLs), which authorities say are constraining credit expansion and economic growth.
Reading the Monetary Policy Committee (MPC) communiqué, Executive Governor Henry F. Saamoi said the decision reflects a cautious approach aimed at balancing inflation control with financial system stability.
NPLs Continue to Weigh on Credit Growth
Despite improvements, NPLs remain elevated. The banking system recorded total non-performing loans of L$13.5 billion, with the NPL ratio still above acceptable thresholds.
Governor Saamoi acknowledged progress but stressed that the issue remains a structural constraint.
“As of the beginning of 2025, NPL levels in this economy were at 21 percent. Today we are at 13 percent. It’s a significant improvement—but the challenges still remain,” he said.
$106 Million in Idle Bank Liquidity
A major concern raised during the session was the inability of commercial banks to deploy liquidity due to fear of loan defaults.
Saamoi revealed that banks are currently holding excess reserves of about $106 million that are not being invested in the economy.
“This is money sitting there… they cannot deploy these resources in the real economy because of the situation of NPLs,” he explained.
He warned that this stagnation directly limits job creation and private sector growth.
Call for System-Wide Intervention
The Governor emphasized that resolving NPLs requires coordinated action across government institutions, including the judiciary and legislature.
“It needs an all-government approach… if we want to see growth and development, we have to address the situation of NPLs,” he said.
Policy Stance and Outlook
The MPC maintained a “cautious tightening bias,” noting that inflation is projected to rise to about 5.3 percent in the second quarter of 2026.
Authorities say maintaining the current policy rate will help anchor inflation expectations while preserving financial stability.
“Stability today is the foundation for growth tomorrow,” Saamoi concluded.
Follow The Liberian Post on Facebook and X (formerly twitter)
