Liberia: Kroll, IMF Involved in Replacement of Liberian Dollar Banknotes

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MONROVIA – Documents in the possession of FrontPageAfricashow that the International Monetary Fund (IMF) has been working with the technical team from the Central Bank of Liberia on a high-level currency changeover implementation plan to ensure an orderly replacement of exercise when the new family of Liberian dollar banknotes are introduced.

FrontPageAfrica gathered that Central Bank’s Technical Committee for Currency Reform (TCCR) has been guided by technical advice from Kroll Associates Inc. (Kroll) (starting in March 2020) and the International Monetary Fund (IMF) earlier.

The technical support from the IMF is primarily focused on the macroeconomic implications of the currency program within the context of the Extended Credit Facility (ECF), while the technical support from Kroll is focused on assisting the TCCR to assess and manage risk associated with the reform process, including procurement, design works, security and other operational issues.

The Central Bank of Liberia (CBL) has disclosed that the first set of these new banknotes – L$100 in the tone of L$4 billion notes, would be released this November for infusion into the economy to help ease the liquidity issues faced during the festive season. 

Why the L$100 Notes?

The CBL document shows that the L$100.00 banknotes were for emergency infusion into the economy this December because of the urgent need for liquidity. The Central Bank contends that L$100 banknotes was selected for an emergency sole-sourcing procurement which sample design is being replicated all other banknotes including the 20s, 50s, 500s and 1,000s.

The CBL noted that the selection of the L$100 banknote is because of the fact that it constitutes the largest component of banknotes in circulation, and also to strike a balance between volume and cost.

Getting Rid of the Old; Infusing the New

The CBL’s Technical Committee for Currency Reform has been working with the IMF experts on a draft highlevel currency changeover implementation plan to ensure an orderly replacement exercise taking into account the operational and logistical constraints of the CBL, including storage capacity, processing capacity, destruction capacity, and transportation capacity.

According to the CBL, it has identified a few additional facilities, including the former National Housing and Savings Bank (NHSB), the former Ecobank Branch in Voinjama and CBL Gbarnga Hub and is still hiring additional manpower and the use incinerators for mass destruction to complement the current banknote destruction machine.

The final plan will define the exact amount to be brought into the country over the two-year period (2021-2022) to accommodate for liquidity demand in 2023 considering the restriction by the National Legislature that there will be no printing and no delivery in 2023. The plan requires the implementation of the exchange exercise largely through the commercial banks under the supervision and monitoring of the CBL. The plan is expected to be finalized and approved this week, and the final copy will be shared with the Executive.

Why New Banknotes?

The Central Bank of Liberia noted that the printing of new banknotes was informed by a request from the Legislature for the introduction of a new family of currency – banknotes and coins. In this regard, the CBL began to work with Kroll and IMF to work on the design. 

The design works were started by the TCCR in early March and Kroll became involved in April following the signing of their engagement by USAID. Due to the limited knowledge and experience of the CBL TCCR in currency designs, the Bank has had to rely significantly on the technical guidance and advice from Kroll but ensuring that the CBL makes the final decisions on each aspect and component of the design process. The design process has been intensive to ensure that the new banknotes and coins meet international best standards in terms ofdesign features, including security features. The first set of designs which were approved by the Board of Governors and the Executive were later revised in favor of a more enhanced designs produced by Crane which was subsequently approved by the Board of Governors and the Executive.

According to the Central Bank, in the face oftime constraints and several operational challenges associated with the currency reform process and its implications for the Extended Credit Facility (ECF) program, the IMF, Kroll, Ministry of Finance and Development Planning (MFDP), and CBL agreed to a three-stage procurement process: (1) emergency sole sourcing procurement for L$8.0 billion (L$4.0 billion by November and L$4billion by January 2022); (2) open competitive procurement for the remaining banknotes, including the balance 100s, the 20s, the 50s, the 500s and the 1000s; and (3) a separate open competitive procurement for the coins.

Emergency Sole Sourcing Procurement of L$8.0 billion: A sole-source direct award contract with Crane was the best option under the circumstances primarily for the following reasons: 1) Crane already had the plates and other origination materials for the previously issued L$100 banknote, and 2) its capacity for both the paper production and the printing of the banknotes.

The first batch of the consignment of L$4.0 billion will be coming by air by November 26, 2021 and the second L$4.0 billion by sea by January 2022. Recent communication with Crane confirms that the production and printing of the LD8.0 billion remains on track.

The first L$4 billion will be solely for liquidity injection, while the second L$4 billion will be used to commence the exchange exercise beginning with the legacy and mutilated banknotes.

With the final designs and specifications of the remaining banknotes completed, the mass open competitive procurement is set to commence shortly. However, according to the CBL, in order to move ahead with this process, the final approvals of the designs for the 20s, 50s, 500s and 1000s are urgently required. The tentative timeframe for the publication of Request for Proposal (RFP) for the remaining banknotes was October 4, 2021. In line with the procurement policy of the Bank, the RFP process will take a total of two months, including the evaluation time. The tentative date for award of contract to the successful bidder is November 23, 2021 latest.

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