What Is the Liberian Dollar (LRD)?
The Liberian dollar (LRD) is the official currency of the Republic of Liberia. It was in use between 1847 and 1907, and again from 1937 to the present. This currency circulates alongside the U.S. dollar due to the strong historical ties between Liberia and the United States of America.
As of September 2020, $1 U.S. is equal to roughly 200 LRD.
- The Liberian dollar (LRD) is the national currency of the African Republic of Liberia.
- Despite its legacy as a former settlement by U.S. slaves and ties to America, the country has experienced political turmoil, corruption, and authoritarian rule, undermining its economy.
- The country has also experienced hyperinflations that have eroded the value of its currency. As a result, the U.S. dollar is still often used in exchange.
Understanding the Liberian Dollar
The Liberian dollar has a history entwined with the U.S. dollar (USD). The currency and the country have also suffered from bouts of hyperinflation and a series of corrupt government leaders. Liberia, on the West African coast, began as a settlement populated by former black American slaves. In 1847, the Liberians formally declared independence and the United States recognized the freedom of the country in 1862. In 1986, Liberia adopted its current constitution, based largely on the U.S. constitution's structure.
The young country issued the first Liberian dollar in 1847, though the currency circulated alongside the far more stable U.S. dollar (USD) until 1907. In 1907, the Liberian government adopted the British West African Pound Sterling as legal tender. This money was the dominant currency of the neighboring British colonies of Sierra Leone and the Gold Coast. However, in 1937, the government of President Edwin Barclay reissued the Liberian dollars to promote Liberian economic independence with the second issue of the LRD.
The Republic of Liberia relies on being an international flag or registry for cruise ships and other transport ships, which accounts for more than 50% of the country's income. It is one of the poorest countries in the world and has a high level of unemployment. According to the 2017 World Bank data, Liberia is gaining stability in its economy. The Republic experiences a 2.5% annual gross domestic product growth with an inflation deflator of 0.3-percent.
The Liberian dollar subdivides into 100 cents and uses the symbol L$ to differentiate it from the U.S. dollar. The Central Bank of Liberia controls the issuance of money and monetary policy for the country.
Corruption Impacts the Liberian Dollar
In 1980, after a coup d’etat and the assassination of President William Richard Tolbert, Jr., the country experienced a financial crisis. Wealthy individuals began importing mass quantities of U.S. banknotes. The Liberian economy suffered hyperinflation, which added to the nation’s suffering. Under the leadership of Samuel Doe, who became very wealthy but little of this money ever made it to the national coffers, charges of government corruption resounded. Amos Sawyer became the head of the government in 1990 after the assassination of corrupt Doe.
Rather than attempting to deflate against the U.S. dollar in Liberia, Sawyer instead attempted to introduce the Liberian dollar as the only legitimate currency for use. His economic policies have been marginally successful in returning Liberia to a modicum of economic stability and fiscal solvency.
A primary reason for the return to the Liberian dollar in 1937 was that the government of Charles D. B. King had enslaved many non-Anglicized Africans to build roads, and used the British West African Pound Sterling to fund the operation. In essence, King used the currency to hide the use of slave labor on official bank statements. After a League of Nations investigation, King stepped down, and Edwin Barclay took control of the government. The Barclay government attempted to reduce the surviving power of King’s ministers by eliminating the value of their assets. A majority of these assets were in British West African Pounds Sterling. Reintroducing the Liberian dollar pegged to the U.S. dollar as the official currency furthered that goal.
Current president George Weah, elected in 2018 hopes to improve living conditions and fight corruption as he continues economic reforms.