Monrovia — Plenary of the House of Representatives has finally approved the Central Bank of Liberia's request to print a new family of banknotes in the tone of L$48.7 billion to completely replace the ones that are currently in use within three years, beginning 2021.
The House made the decision on Thursday, in its 19th day sitting following the passage of a resolution through a unanimous vote in plenary based on a motion filed by Rep. Acarous Moses Gray (District #8, Montserrado County).
In the legislative piece named and style 'Resolution 001-2021', the House mandated the CBL to print 20, 50, 100 and 500 denominations, omitting the L$5 and L$10 bank notes.
Excerpt of the Resolution: "Now, therefore, in accordance with the above, the National Legislature, comprising of the House of Representatives and the Senate, hereby authorizes the Central Bank of Liberia to print new family of currency in the amount of Forty-eight Billion Seven Hundred Thirty-four Million as requested and subject to the following conditions... "
The CBL, which is clothed with the authority to administer the monetary regime of Liberia, through its Board of Governors headed by Executive Governor J. Aloysius Tarlue had sought approval from the Legislature to print a new families of banknotes, and minting of coins in the amount of L$48.7 billion (L$48,734,000,000) at a printing cost of US$45.5 million (US$45,522,000). The CBL also requested that the new family should include 20, 50, 100, 500 and 1,000 banknotes, while the Five and Ten dollars denominations should be minted in coins.
However, the House, in the resolution, nullified the L$1,000 banknotes and said that the denomination of bank notes to be printed shall only be 20, 50, 100 and 500. The House, however did not mention anything about the five and ten dollars denominations.
Because of the omission of L$1,000 notes, the House called on the CBL to reduce the printing but did not give a specific amount.
Measures, Precedent to print new Families of Currency
In its bid to not repeat mistakes of the 53rd Legislature in granting the CBL approval that led to the alleged missing L$16 billion hullabaloos, the House outlined several measures that the CBL should put in place before, during and after printing of the new money.
The House charged that the CBL shall make the relevant adjustments in the total volume to be printed, the cost of printing and a less amount of printing cost consideration that the denomination of 1,000 Liberian dollars bank note is not to be printed.
The House further stated that the CBL shall arrange with the printer appropriate payment plan, considering the budget of the bank, and that plan shall be with the Legislative committees responsible for oversight.
It also called on the Legislature, in collaboration with the Ministry of Finance and Development Planning to make available the additional funding in the amount required for the full replacement through budgetary appropriation.
In addition, it called for the CBL to ensure that there is adequate logistics in place to manage the currency reform process, develop a currency management strategy with a reformed and strong internal control system and ensure an internal financial assistance audit as well as risk mitigating measures to safeguard the reform process.
The House also charged the CBL to notify the Legislature of the actual volume and value of currency printed and imported into the country at every interval from 2021 to 2023; adding that the replacement shall only be done through the CBL, the commercial banks and designated financial institutions regulated and supervised by the CBL.
Meanwhile, the Chairman of the House Committee on Banking and Currency, Rep. Dixon Seboe (District #16, Montserrado County), speaking to reporters after Thursday's session at the Capitol, , lauded his colleagues for their overwhelming support to the resolution and said the printing of the new family of banknotes will bring a great relief to the country's economy.
Rep. Seboe revealed that the initial money to be printed by the CBL will be over L$35.7 billion, adding that the decision to print such amount is triggered by various indicators such as the demand and supply for money, among others. He noted it is also intended to ensure that over the space of three years, such demand and supply for money would be under control.
In February 2021, the CBL requested the 54th Legislature to approve the printing of L$48.733 billion new banknotes to replace the current family of banknotes including an L$8 billion-plus mutilated Liberian dollars on the market.
In a communication to the House, the CBL, through Executive Governor Tarlue informed the lawmakers that the money requested is needed to address the country's current liquidity demands for three years (2021-2023) and restoring confidence in the Liberian dollars.
"I have the honor to present my sincere compliments and herewith submit to you and the Honorable House of Representatives, Resolution No. BR-02/2021 of the Board of Governors of the CBL about a currency reform proposal for comprehensive replacement of the existing family of Liberian dollars banknotes in three years (2021-2023) for consideration and approval in compliance with Section 23 of the CBL Act. Based on the CBL forecast, the total projected amount of new banknotes to be printed isL$48.733," Mr. Tarlue wrote in his communication.
The bank then outlined that L$35,769 billion will be printed in 2021 (at a cost of US$39.693 million); L$7.536 billion in 2022 (at the cost of US$3.630 million), and L$5.402 billion in 2023 (at a cost of US$2.199 million) to meet the current and medium-term currency demands.
The CBL request to print a new family of banknotes comes amid an acute shortage of local currency in the banks, forcing tellers to restrict daily withdrawal, something that continues to anger customers and sometimes leaving them stranded.
The request was also in line with President George Weah's recent appeal to legislators in his 4th Annual Message on January 25, 2021 to act swiftly to resolve the situation before the next season of high demand for cash.
The President pleaded with lawmakers to quickly approve the printing of a new family of Liberian banknotes to rescue the liquidity pressure on the Liberian dollar which is he termed as an aggravated increasing demand for the local currency.
"In the face of this liquidity situation, and while we endeavor to encourage our citizens to sustain the wider use of mobile money for transactions, the Executive will intensify consultation with the National Legislature to pursue currency reform, to promote monetary policy credibility and enhance confidence in the economy," President Weah said.
The communication has been sent to the Liberian Senate for scrutiny and possible concurrence.