— as Senate Plenary prepares to debate CBL’s request to new family of banknotes
Alexander Benedict Cummings, political leader of the opposition Alternative National Congress (ANC), is urging the Senate against granting approval to the Central Bank of Liberia’s (CBL) request to print L$48.733 billion in a new family of banknotes.
Cummings, who wrote the Senate yesterday, cautioning the august body against concurring with the House of Representatives, said in his letter that granting the CBL the permission now to print a new family of banknotes will worsen the economic situation and further plunge the country into more devastating consequences, with the majority of the population at the center of those terrible future realities.
“The critical problem haunting monetary policy in the country, as even alluded to by numerous expert reports and analysis, including Kroll, is the lack of confidence in the banking sector due mainly to systemic failure, administrative inefficiencies, and mismanagement,” Cummings said in his letter addressed to Senate Pro Tempore, Albert T. Chie.
The letter, which was served on the Senate early before it convened its session on Monday, March 29, added: “The Central Bank of Liberia’s request to the Legislature for the printing of new family of banknotes must be treated with extreme caution and critical analysis before approval is given.”
Cummings said the reason for his caution to the Senate and, in general, the Legislature, was to bring to their attention the extreme untold suffering the already suffering masses of the country would go through if the new family of banknotes is printed.
In February this year (2021), CBL wrote the House of Representatives, seeking approval to print L$48.733 billion in order to remove the current sets of banknotes from the market.
A fortnight ago, the Lower House approved the CBL’s request by a majority vote, to proceed with the printing of the banknotes over the course of three years and by installments.
The Senate Joint Committee on Ways, Means, Finance, Banking, and Currency has recommended to Plenary to concur with the House of Representatives on the bill. But the Joint Committee will now have to convince the Plenary to agree with the bill as approved by the Lower House.
This is what Mr. Cummings is imploring the Senate Plenary to avoid.
“This is to avoid unintended consequences that may adversely exacerbate the already difficult economic conditions faced by the country,” Cummings further said. “Monetary policy, like all economic policies intended to cure defects in the economy, requires a clear definition of the problem, the prescription for remedy, and objectives or outcome to be achieved.”
According to him, “Anything contrary is tantamount to side-stepping the main vexing issues underpinning our current monetary space and may lead us into a circular path to nowhere, or what I often refer to as ‘doing the same thing over and again and expecting different result.’
The ANC political leader asked a series of questions to which he hopes the Legislature or the Executive provides answers.
“The key questions for the Legislature and those responsible for our monetary policy are: What has led to the complete loss of control of monetary policy by this government? How can the printing of L$48 billion family of currency, as necessary as that might be at some point in the future, solve the confidence crisis now? “Which should come first, the printing of this huge quantity of money amidst the systemic, administrative, and managerial issues, or defects before printing additional money?” he asked.
Cummings’ party, ANC, is a member political institution to the opposition Collaborating Political Parties (CPP), to which the former ruling Unity Party (UP), All Liberian Party (ALP) and the Liberty Party (LP) all belong.
“The CBL, by its own admission, has indicated that the total estimated volume of money currently in circulation is L$23 billion. Why is it requesting the printing of L$48 billion, a difference of L$25 billion, which doubles the original amount in circulation,” Cummings further enquired.
“Has there been a proper audit and accounting of all previous monies printed, including the recent printing of L$4 billion before last December Senatorial elections that included LRD 500 notes that were reportedly out of the commercial banking sector?”
“The Minister of Finance and Development Planning (MFDP), by his own admission, announced the successful subscription of auctioned bonds intended to retrieve Liberian Dollars outside of the banking sector. Despite the Minister’s pronouncement, Commercial Banks were reporting serious liquidity problems. There needs to be an audit and accounting of the sales of bonds,” he recommended.
He further said that the Weah-led government has even failed to implement the recommendations in the Kroll report, which calls for forensic investigation in the US$25 million used to “mop-up excess liquidity”, in order to stabilize the exchange rate between the United States Dollar and the Liberian Dollar.