The House of Representative has voted unanimously to probe the Central Bank of Liberia for the lack of coins and smaller denominations of the country’s current currency.
The House’s decision reflects the frustration of lawmakers with the Bank for allegedly creating a shortage of smaller banknotes as well as delaying the minting of coins as instructed by the legislature.
“At present, the CBL has infused into the economy the L$100 bills, leaving out other denominations, which has created shortages and forced the recirculation of badly mutilated notes as legal tender,” the House said.
The shortage of the Liberian dollars is not only becoming a daily frustration, it has also led to what some consider to be an artificial drop in the exchange rate with high commodities prices, and badly mutilated notes being used.
According to Representative Richard Koon, whose communication triggered the voted probe, “the shortage is becoming a daily frustration, as Liberians from all walks of life cry for smaller denominations as they are losing change on a daily basis and the lack of minted coins has made the problem worse.
The Montserrado County District #11 lawmaker said that it was heartbroken to know that, “as Liberians are going through turbulent times, they are often frustrated when transacting with cash due to the shortages of smaller banknotes.” Rep. Koon furthered that on many occasions either buyer or seller will unsatisfactorily leave petty cash with the other party during transactions, which is bad and uncivilized.
But the CBL, in response to a similar probe by the Senate, informed the public on June 21 that they were working diligently to ensure the problem is permanently resolved. CBL authorities noted that the Bank is working very closely with the Royal Mint in the United Kingdom to ensure the coins are brought into the country much earlier than expected.
“Considering the 3-year average lifespan of the Liberian dollar banknotes, and the yearly estimated mutilated rate of 7.0 percent, most of the existing banknotes, especially smaller denominations, have already outlived their lifespan and CBL has not been able to print additional smaller banknote denominations during the past years to replace existing mutilated banknotes since 2017.
“This shortage of L$5 and L$10 has been further heightened by the increased demand on the smaller denominations due to the growth in the population and expanded scope of economic activities, including kekeh and motorbike ventures, as well as other small marketeers’ need for smaller denominations,” the CBL’s statement said.
The CBL added that the implementation of the mandate of the 54th National Legislature to replace all the old banknotes in circulation means that the bank cannot print additional denominations of the existing banknotes, while at the same time make arrangements to mint the L$5 and L10 coins.
It added that the latter process involves more time, given that Liberia is introducing a new set and designs of coins that are completely different. The CBL excuse comes after promising last year to ensure that banknotes including the L$20, L$50, L$500, and L$1000, and the L$5 and L$10 coins were due in the latter half of 2022.
Meanwhile, the House probe would lead to the appearance of CBL authorities, who would then be grilled by members of the Committee on Banking and Currency, charged with the authority to investigate the saga and report within two weeks.