Liberia presents a wealth of unexplored investment opportunities in sectors such as natural resources, agribusiness, infrastructure, tourism, and fintech. Positioned advantageously along the Atlantic coast, it grants access to both regional and global markets. Investors are urged to consider opportunities in Liberia because of its plentiful natural resources, featuring significant reserves of iron ore, gold, diamonds, and fertile land for agriculture; appealing government benefits like tax breaks, duty-free imports, and allowances for profit repatriation; a growing market fueled by rising consumer demand and a burgeoning digital economy; and supportive policies that promote the advancement of fintech and infrastructure. With ongoing economic reforms and a business-friendly climate, Liberia is poised for investment.
1. Legal framework
1.1. What laws and regulations govern exchange control regime in your jurisdiction?
- Central Bank of Liberia Act 2020 (as amended)
- Central Bank of Liberia Bills Auction › Amended Foreign Exchange Auction Rules and Regulations No. CBL/FMD/09/2019.
- Amended Foreign Exchange Auction Rules and Regulations.
- Framework for the Administration of the Interbank Markets (IBM).
1.2. Which bilateral and multilateral exchange control instruments have an effect in your jurisdiction? How is regulatory cooperation and consolidated supervision ensured?
There are currently no bilateral and multilateral instruments affecting exchange control in Liberia.
1.3. What are the current priorities of regulators and how do they work with the banking industry?
The Central Bank of Liberia is focused prioritizing the importance of increasing the country's foreign reserves to safeguard the economy from unexpected domestic and international disturbances. It seeks further to maintain the current managed float foreign exchange regime by intervening in the foreign exchange market when required to ensure market stability.
The Central Bank is fixed on pursuing policy initiatives designed to support trade finance for companies, alleviate the burden on foreign exchange bureau payments by businesses, enhancing financial markets to draw in greater foreign investment in local financial assets, and offering policy recommendations to the Government regarding the necessity for diversifying the Liberian economy to bolster the Balance of Payments (BoP) and International Investment Position (IIP) of Liberia.
In order to address the difficulties encountered by small and medium-sized enterprises in Liberia regarding cross-border trade, the Central Bank of Liberia will investigate the potential for establishing bilateral currency swap agreements with other central banks, particularly those within the West African Monetary Zone (WAMZ).
2. Exchange control regime
2.1. Can a subsidiary or affiliate repatriate money to a non-resident parent company?
Liberia allows for the full repatriation of funds and has no restrictions on currency exchange.
2.2. Is there limitation of transfer of foreign currency to procure goods or payment for services to non-resident person?
The Central Bank of Liberia’s Regulation regarding foreign currency transfers permits the transfer of foreign currency by businesses, organisations or individuals without a limit on the amount. Nevertheless, the amount intended for transfer must have been deposited in the entity’s bank account for at least three (3) banking days before the transaction.
2.3. Can a subsidiary easily make payments for intra-group transactions?
Yes, a subsidiary can easily make payments for intercompany transactions.
2.4. Are there rules against intercompany netting off?
There are no rules against intercompany netting off.
2.5. Are permits required to transfer money to a third party or non-resident entity for procurement of goods or services?
There are no specific permits required for the transfer of money to a third party or non-resident entities for goods and services.
2.6. What requirements or documentation must be in place before banks authorize requests for international transfers?
Banks require the following documentation to initiate an international transfer from Liberia.
- Valid Identification;
- A completed transfer form detailing the transfer amount, currency, beneficiary’s details and purpose of the transfer;
- Proof of Funds;
- Beneficiary Information;
- Invoices, contracts. Or purchase orders
2.7. Have there been recent directives issued by your Central Bank on Exchange Control?
Yes, The Government of Liberia, through the Ministry of Commerce and Industry, the Liberia Revenue Authority (LRA), the Central Bank of Liberia (CBL), and the Ministry of Finance and Development Planning (MfDP), has issued a series of directives, which include:
- Recognizing the Liberian dollar as the official currency for transactions, even though the US dollar remains legal tender;
- Mandating that businesses and forex bureaus prominently display their exchange rates between the US dollar and the Liberian dollar at their places of operation; and
- Promoting the utilization of the Liberian dollar for investments and tax payments.
3. Exchange control contraventions
Enforcement
3.1. Which entities are responsible for enforcing the relevant laws and regulations? What powers do they have?
The Central Bank of Liberia oversees the enforcement of relevant laws and regulations regarding exchange control in the country. They are tasked with establishing a suitable foreign exchange regime, developing and executing foreign exchange policy, as well as holding and managing foreign currency.
Sanctions
3.2. What sanctions are applicable in the event of a violation of the exchange control regime?
Violating the exchange control regulations in Liberia may lead to the following consequences:
- Financial institutions that fail to comply with or implement measures to adhere to the regulations regarding foreign currency transfers will face a penalty of either US$ 1,000.00 or 25% of the transaction value, whichever amount is greater;
- Conducting foreign exchange activities without the required licenses from the Central Bank of Liberia may result in the confiscation of assets and the shutdown of their operations.
4. Trends and forecasts
4.1. How would you describe the current exchange control regime and trends in your jurisdiction? Are there any plans for further developments in the next 12 months, including proposals for legislative reforms?
Liberia operates under a floating exchange rate system, where both the Liberian dollar and the U.S. dollar are accepted as legal currency. There are no limitations on the conversion or transfer of funds related to investments, profits, loans, or interest. The exchange rate is influenced by the dynamics of market supply and demand. Nonetheless, the Central Bank of Liberia (CBL) sometimes steps into the foreign exchange market via foreign exchange auctions and government Treasury bill auctions to help stabilize the exchange rate, support imports, keep inflation low, and encourage economic growth. However, no new legislative developments or reforms are anticipated in the next 12 months currently.
4.2. Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with regard to cryptocurrencies or financial technologies in general?
Liberia has not implemented particular regulations regarding cryptocurrencies. Liberia is currently taking a cautious approach to cryptocurrencies, with minimal regulatory progress. The Central Bank of Liberia (CBL) has cautioned investors regarding the dangers linked to digital currencies but has yet to create a thorough regulatory system to oversee their usage.
