The Government of Liberia has introduced what it calls "new inflation policy" aimed at reducing the high rate of inflation against the United States Dollar (USD) to the Liberian dollar (LD).
The policy will ensure that taxpayers do not have to buy USD for the purpose of paying their taxes, Finance Minister Amara Konneh told a press conference Tuesday in Monrovia.
Konneh said after extensive consultations with the Central Bank of Liberia (CBL), the Ministry of Finance is instituting the "complementary action" intended to improve the value of the LD and stabilize the exchange rate.
As part of the measure, the government said "Immediately and going forward, all taxpayers have the option to pay their taxes in Liberian dollars as exchange rates announced and published by the CBL on the day of the transaction; however, this policy action does not affect the customs duties which are a result of international trade."
Additionally, the Minister said "importers of petroleum products will also have the option to pay their sale tax portion of their taxes in Liberian dollars.
He added that "this policy action will ensure that petroleum importers who are selling most of their products in Liberian Dollars can use their Liberian dollars to pay their sale tax which is about 50% of their taxes on imported petroleum. They don't have to exchange their Liberian dollars for US Dollars to pay their sales tax."
The LD has been under pressure in recent months, depreciating 8.2% against the USD from August 2012 to August 2013.
This has made the prices of key commodities like rice and petroleum products more expensive the before, affecting mainly the ordinary citizens.
However, in the short term, the MoF said "It shall Increase its sale of United States Dollar to the CBL in order the boost Liberia's foreign reserves position. Konneh further indicated that in the medium-term, "the MoF will engage in a campaign to increase revenue that will match its Liberian dollar expenditure needs."
In addition to the new measure, the Minister said the government will continue efforts of ensuring that 25% of the purchases of goods and services in the budget are spent on Liberian owned businesses.
The Finance Minister also highlighted progress being made on key fiscal policies, infrastructure projects as well as structural issues in the overall economy.
He said the government has begum the full execution of the 2013/2014 National Budget with the disbursement of US$155 million from July 2013 to mid November.
According to Konneh, "Post-war economic growth, under the leadership of President Ellen Johnson-Sirleaf, has been sustained through steady increase in economic productivity, mainly from iron ore exports, construction and strong performance in the service sector."
He said unemployment amongst the youthful population of the country remains a crisis. "Creating a gainful employment for young people is vital for peace, security and economic transformation of the state.