-As ANC Cummings sounds caution
A request by the Central Bank of Liberia (CBL), to print about $48 billion new Liberian bank notes at the cost of approximately US$45.522 million is causing stir here.
The request if approved, would see the CBL maintaining some of the old denominations of L$5, L$10, L$20, L$50, L$100, L$500, with a however, a new currency denomination of L$1,000 would add.
CBL’s Executive Governor J. Aloysius Tarlue had informed lawmakers that the money, which will be printed over a 3-year period (2021-2023), will be used to address the country’s current liquidity problems and restore confidence in the Liberian dollars.
But the request has been greeted with criticism with many saying, it is intended to enriched public officials and not address the problems.
Already, the noise over the “Missing LRD16 Billion” has not gone away coupled with demands that the government account for the recently printed LRD$4 billion just before the December 8, 2020 mid-term elections.
In a letter addressed to Senate Pro-tempore Albert Chie, Vice President Jewel Howard Taylor and House Speaker Boahfal Chambers, the Alternative National Congress (ANC), Political Leader Mr. Alexander Cummings warned the hierarchy of the Legislature to exercise extreme caution and critical analysis before giving an approval.
Mr. Cummings opined that this will avoid unintended consequences that may adversely exacerbate the already difficult economic conditions faced by the country.
He explained that monetary policy, like all economic policies intended to cure defects in the economy, requires a clear definition of the problem, the prescription for remedy, and objectives or outcome to be achieved. The former Coca-Cola Executive added that anything to the contrary is tantamount to side-stepping the main vexing issues underpinning our current monetary space and may lead us into a circular path to nowhere, or what I often refer to as ‘doing the same thing over and again and expecting different result.
See excerpts of the letter below:
Excerpts of the letter: “The critical problem haunting monetary policy in the Country, as even alluded to by numerous expert reports and analysis, including Kroll, is the lack of confidence in the banking sector due mainly to systemic failures, administrative inefficiencies, and mismanagement. The key questions for the Legislature and those responsible for our monetary policy are: What has led to the complete loss of control of monetary policy by this government? How can the printing of 48 billion family of currency, as necessary as that might be at some point in the future, solve the confidence crisis now? Which should come first, the printing of this huge quantity of money amidst the systemic, administrative, and managerial issues, or the resolving of those defects before printing additional money?
Here are few issues to ponder as the Legislature consider the CBL’s request:
➤The CBL, by its own admission, has indicated that the total estimated volume of money currently in circulation is 23bn (twenty-three billion). Why is it requesting the printing of 48bn (forty-eight billion), a difference of 25bn, which doubles the original amount in circulation?
➤Has there been a proper audit and accounting of all previous monies printed, including the recent printing of 4bn (four billion) before the last December Senatorial elections that included LRD 500 notes that were reportedly out of the commercial banking sector?
➤The Minister of Finance and Development Planning, by his own admission, announced the successful subscription of auctioned Bonds intended to retrieve Liberian Dollars outside the banking sector. Despite the Minister’s pronouncement, Commercial Banks were reporting serious liquidity problems. There needs to be an audit and accounting of the sales of Bonds.
➤The Finance Ministry and CBL are still to fully account for the mismanagement of the 25 million United States Dollars. To date, no one has been held accountable.➤The GoL is yet to fully comply with the KROLL and PIT’s Recommendations calling for a forensic investigation into the USD25 million “mop-up” fiasco.
In addition to the above issues, it is confusing for the CBL of late to be heralding the digitization of the economy or the use of mobile money, ATM, and other electronic money transaction systems and at the same time requesting the printing of such huge sum of money, even if it were for reserve purpose.
In the absence of proper sanitization of the system and proper accountability and transparency, the problem of LACK OF CONFIDENCE in the banking sector will continue to persist. Also, the printing of huge sum of currency, if not managed properly, especially by what is evidently an inept and incompetent government, will lead to inflation that could worsen the suffering of the Liberian people.
Finally, the hurry to print such huge amount of currency without addressing the many controversies and questions surrounding past monies, especially the USD25 million mop-up fiasco could lead to the sanctioning of individuals of this government for money laundering as hinted in the KROLL and PIT Reports, and could also put the Country at risk of being blacklisted. We therefore call on the Senate to delay the CBL’s request for the printing of 48 billion until there is full accountability of previous monies and until there is sanitization of the system. GARBLEH
By Othello B. Garblah