Liberia: How the Recommendation to Print New Banknotes Came About
Monrovia – As the debate on the printing of new banknotes intensifies, especially from whence the suggestion for the printing of new money originated, FrontPageAfrica has seen new empirical pieces of evidence that clearly show that this suggestion didn’t actually originate from the recently held National Economic Dialogue (NED). But that it had come from the government itself.
Government’s actors have said that President George Manneh Weah’s request to the Senate to grant him the authority to print new banknotes had come from the NED, where “experts” had gathered to debate and proffer ways at fixing the nation’s ailing economy. The President’s request to the senators was made barely three days after the NED had submitted its final recommendations to him following its three-day session at the Ministerial Complex in Congotown.
Amount the President Wants to Print
The government has not come on the record to state the total amount of new currency it wants to print for circulation in the economy. However, cogent sources in the legislature have told this newspaper that the President wants to print at least L$35 billion. To print this amount, the government will need US$34 million to underwrite the cost of the printing.
When the President’s letter was read in the Senate, it was sent to the Senate’s Committee on Banking and Currency.
Senate’s Banking C’ttee Gives Greenlight
On Monday, September 16, the Senate’s Committee on Banking and Currency, chaired by Grand Gedeh County Senator Dennis Marshall, recommended to the Senate Plenary, to go ahead and endorse the President’s request to print the new Liberian dollar banknotes. The Committee even endorsed the introduction of new L$1,000 denomination, which might be added should the new notes be printed.
Sen. Dennis justified that the Central Bank of Liberia’s Board is unable to state exactly the amount of Liberian Dollars in circulation.
“The solution to solve the inflation problem with our currency against the US dollars according to the Central Bank of Liberia, is for us to completely replace the existing banknotes to uniform banknotes that they will have authority over and know how much is in circulation,” Sen. Marshall said.
However, when the Executive Governor of the Central Bank of Liberia, Mr. Nathaniel R. Patray, III, delivered his address at the NED, he never mentioned the printing of new banknotes as a way forward to fixing the economic woes the county faces at the moment.
Information Minister Eugene Nagbe
On Thursday, September 12, when he addressed his Ministry of Information, Cultural Affairs and Tourism’s regular press briefing (MICAT), Min. Lenn Eugene Nagbe said, “Right now, we as a government don’t know how much Liberian dollars we have in the country and at the same time we do not know where it is kept; so, we will change the money.”
Min. Nagbe stressed how bad it is for any government to run an economy without knowing the total liquidity of its currency on the market.
“So, we will fix that, that’s monetary policy. The President has approved that and it be implemented. So, if you want to keep your money anywhere that’s your business, keep it but you will be affected.”
New Evidence to Show GOL Had Harbored the Thought to Print New Money
However, FrontPageAfrica can state here categorically that the government had long harbored the thoughts to one day print new money long before the conveyance of the NED.
On page 27, under the “Medium-to Long-term Monetary Policy Measures” of the government’s Technical Economic Management Team’s (TEMT) 38-page “Report on the State of the Liberian Economy, Policy Intervention & the Details on US$25 million Invention,” which was submitted to the Senate, the TEMT had recommended the introduction of new banknotes. This request is among several recommendations made and the implementing parties are the Central Bank of Liberia, the Legislature and the Ministry of Financial and Development Planning. According to their timeline, this should have been done by March 2019.
The reason is “To replace existing banknotes in order to have a uniformed family of banknotes.” In addition, it was also recommended that the government should underwrite the financial cost of printing the new banknotes.
Makeup of the TEMT
The TEMT, which is the technical arm of the Economic Management Team (EMT), is chaired by the Minister of Finance and Development Planning at the moment Samuel D. Tweah. Other members include the Executive Governor of the Central Bank, Co-Chair; Minister of Commerce and Industry, Minister of State without Portfolio, Commissioner General, Liberia Revenue Authority, Chairman, National Investment Commission and Economic Advisor to the President. These are the senior government, who had recommended the printing of new currency months ago.
Central Bank “Does Not Know” Money in Circular
The Senate’s Banking and Currency Committee chairman, Senator Dennis Marshall and Information Minister Eugene Nagbe argue that the government doesn’t know the amount of Liberian dollars in circulation in the economy and so it is right for the government to print new banknotes.
One Liberian financial expert, who asked not to be named, for fear of reprisal stressed: “The argument that the GOL does not know the full amount in circulation is stupid and childish. The money was printed by the Central Bank of Liberia. In the ongoing alleged missing L$16 billion saga, the Bank under Nat Patray and the government said that no money got missing and that they can account for every cent that was printed and brought into the country. How come now they are now saying that they don’t know the total amount of money in circulation?”
Touching on the Senate’s Banking and Currency Committee’s greenlight to print the new money, he asked, “Was there ever a public hearing to inform their recommendation to their colleagues? Whom did Dennis Marshall-headed Committee invite? The Committee needed to have had a public hearing by inviting the international financial experts, including the IMF, World Bank, etc, national financial experts, the bankers’ association of Liberia and others.”
He asked: “What study was done to inform this decision that printing new money is the way forward?”
Central Bank and TEMT Reports
In separate reports of both the Central Bank of Liberia and the Technical Economic Management Team, the amounts of Liberian dollars in circulation are clearly mentioned for some months.
Specifically, for the TEMT, in its report to the Senate, it states: “Since the commencement of the direct intervention strategy, the CBL has mopped up a total amount of L$2,303,363,898.00, representing 59.4 percent of the L$3.88 billion of currency outside banks (COB) initially targeted. The United States Dollar equivalence of the amount mopped up as at October 26, 2018 is US$15.0 million, reflecting 60.0 percent of the US$25.0 million earmarked for the Intervention.
“The CBL statistics at end-August 2018 shows that over L$15,477.85 billion of currency is outside of the banking system, constituting 90.4 per cent of the total currency in circulation.
“Regarding the printing of bank notes, the CBL notes that the printing involved two components: (1) printing of an initial amount of L$5.0 billion Liberian dollar for replacing mutilated notes and (2) printing of L$10.5 billion to replace the remaining legacy notes in circulation.”
For the CBL, on page five of its Monthly Economic Review for April 2019, produced by the Bank’s Research, Policy & Planning Department, it says the amount of Liberian dollars in circulation for that month was L$19,148,420,000 (L$19.15 billion).
FrontPageAfrica has not been able to see the report for the remaining months after April 2019.
Who Will Finance the Printing of New Banknotes?
Even though in the TEMT’s report to the Senate, they urge the government to shoulder the cost of printing the new currency, but in the Draft National Budget for Fiscal Year 2019/2020, nothing is placed there for such important national instrument.
While this is still being discussed, there are, speculations, however, on social media stating that the new money has already been printed and it was reportedly done in China around the end of July and containers of loads of it arrived in country on August 19, 2019. The rumors also have it that the Chinese firm which printed the L$35b has been awarded a mine in Lofa County. The reported colors of the money are red, purple, green, gray and blue. There are also speculations, all of which have not been independently verified by this newspaper, that a wealthy Burkinabe businessman, who is a close friend of President Weah, did allegedly finance the printing of the new banknotes and has been promised a mine in Lofa County. Every government official is tightlipped. Some have, however, dismissed these speculations that nothing of such has happened.