The Central Bank of Liberia bluntly told members of the House of Representatives last week that it cannot account for 10.9 Billion Liberian Dollars in the economy because they were put in circulation outside of the banking system.
Central Bank of Liberia Executive Governor Milton Weeks made the startling revelation when he appeared before the House’s Plenary to provide reason for the huge mutilated Liberian Banknotes still in circulation despite the printing of new banknotes to replace the mutilated ones.
Governor Weeks notes that huge quantity of old Liberian banknotes that were put in circulation by his predecessors have become mutilated, while others are being pocketed by private citizens and companies, outside the banking system thus, making it very difficult if not impossible for the CBL to with draw the mutilated banknotes and replaced them with the new banknotes printed by the government.
The Executive Governor’s assertion raises a very grave concern about the uncertainty that seems to becloud our monetary system. Something urgent needs to be done to rescue the economy from too much money chasing few goods in the market, which is a by-product of inflation.
If the institution that is statutorily responsible to monitor the country’s monetary system can come out publicly to say it has no control over 10.9 Billion of the national currency in circulation and therefore, unable to regulate its movement in the economy, it creates enough room for concern.
The Liberian economy is facing serious recession, with the exchange rate between 110 and 111LRD to one United States Dollar, far above the official rate of 100LRD to $1.00.
Governor Weeks told the lawmakers that this problem has put the CBL in a difficult position in replacing mutilated banknotes currently in circulation without further exacerbating the already inflationary posture of the economy.
He pointed out that currently, the Liberian government possesses 12.6 Billon of the newly printed Liberian Banknotes, and of this amount, only 1.6 Billion LRD is in circulation, and 9 billon LRD has been distributed among commercial banks, while the rest, which he did not disclose, is in the vault of the Central Bank.
Governor Weeks’ predecessor Dr. Joseph Mills Jones executed a controversial loan scheme while serving at the bank that saw the infusion of huge amount of Liberian dollars in circulation with the actual amount today still remaining an issue of big debate here.
The loan scheme saw millions of Liberian dollars being put in the hands of community residents, mainly rural dwellers as stimulant packages, but beneficiaries of the scheme have become partisans and sympathizers for Dr. Jones, who has become a presidential aspirant and standard bearer of the Movement for Economic Empowerment or MOVEE party.
Chasing the 10.9 Billion Liberian Banknotes wherever they are may not only become a cumbersome task, but illusive both for this administration and the new government to come.