Liberia: The Legislature Recommended the Printing of L$1,000 Banknotes
MONROVIA – FrontPageAfrica has obtained a copy of the Joint Resolution from the Legislature mandating the Central Bank of Liberia to print a new family of Liberian dollar with new designs and features and a L$1,000 denomination.
The Central Bank was also instructed to get rid of the L$10 and L$5 banknotes. These denominations are to be minted into coins, the resolution states.
“That the denomination of banknotes to be printed shall be L$20, L$50, L$100, L$500, and L$1,000 and the denominations to be minted in coins shall be L$5 and L$10,” the Joint Resolution stated.
The Legislature also gave the Central Bank of Liberia the mandate to ensure that the printing of the banknotes and minting of coins are undertaken during 2021, 2022 and 2024 to respond to future liquidity in 2024.
The Joint Resolution also mandated the Central Bank to put in place adequate logistics and governance arrangements, including appropriate procedures, intemal controls, and compliance functions, to ensure the integrity and transparency of the currency reform process.
The joint resolution also noted the follows:
That CBL shall draw up a detailed implementation plan that is commensurate with its implementation capacities; and
That CBL shall ensure effective intemal and external financial and system audit as well as risk mitigating measures to safeguard the reform process and ensure full accountability.
The CBL shall undertake to expedite the currency reform process while respecting capacity limits to implement it safely and while ensuring that the economy is supplied with adequate liquidity throughout the operation.
The CBL shall arrange with the printers, appropriate payment plan considering the budget of the Bank and financing gap of such plan shall be discussed and concluded through a formalized arrangement with the MFDP;
That the National Legislature shall ensure that the financing gap for the full replacement in excess of the amount allocated in the CBL’s budget for priming of banknotes and minting of coins is made available through budgetary appropriations.
FrontPageAfrica had earlier reported 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.
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.