The General Auditing Commission (GAC), one of Liberia’s integrity institutions charged with the responsibility to audit all government entities, has sternly warned the government against printing of ‘new money’ or banknotes to replace the ones in circulation.
According to an October 8, 2019 communication addressed separately to House Speaker Bhofal Chambers and President Pro-Tempore Albert T. Chie, the GAC called on both Houses not to accept the request made by the Executive, “because it will accordingly have an adverse consequence on the economy and the people.”
A copy of both letters, signed by the Auditor General, Mrs. Yusador Gaye, is in the possession of the Daily Observer.
The GAC’s communication added, “I am strongly of the opinion that giving your approval to print more currency is unfathomable, but will be very misplaced, granted we are yet to understand all what happened at the last currency printing, as evidently, the US$25 million mop-up exercise does not engender much confidence in the Central Bank of Liberia (CBL).”
The GAC continued: “In fulfillment of part of my constitutional mandate aimed at providing support to your oversight of financial management role, I firmly suggest that you do not waver on your resolve not to print additional Liberian currency/money at this time.”
It can be recalled that in September 2019, President Weah sent a communication to both houses of the Legislature, calling for their approval to print new banknotes due to unaccounted currency infused in the Liberian economy.
Acting upon the President’s request, the Senate Committee on Banking and Currency, chaired by Grand Gedeh County Senator Marshall Dennis, quickly recommended Plenary’s affirmation. But the committee’s response to the President’s request drew vehement opposition from Senators Darius Dillon, Oscar Cooper and others.
Margibi County Senator Oscar Cooper wondered why the CBL should request to print L$35 billion, when the money in circulation is L$21 billion that needs to be removed from the market. “What becomes of the difference of L$14 billion, which was not properly answered by the Governor?” he asked.
According to counts provided by the GAC, “most currencies are fiat in nature, which means they are not backed by any tangible commodity, and technically have no intrinsic value, but rather by the government’s authority and trust. Again, fiat money has value only because government maintains its value or because parties engaging in exchange agree on its worth.”
The AG continued: “A review of the daily exchange rate on the CBL website shows that the exchange rate has steadily risen on a daily basis during the period August 16, [to] October 2, 2019. Generally, a major problem of the fiat currency is inflation, and as government prints new money, the currency already in circulation devalues.”
The GAC said the most important rationale for the entity’s professional advice in addition to the above are that: a) “it has not been verified whether the CBL has implemented measures to address the lapses noted by the Kroll’s Scoping Report (3.2.8 non reconciliation of vault balances and 22.214.171.124 in constancy in finance department); b) the Presidential Investigative Team (PIT) report 2.2.25 –raises alarms of no security in place for the protection of reserves; and c) the GAC’s Agreed-Upon Procedure on the US$25 million mop-up exercise highlighted (1.1.3 unsigned, and not dated minutes, 2.4.2 lack of procedure for posting, and 2.4.3 disbursement not processed through the bank).”
The communication further raised several questions, including that, “the investigation into the whereabouts of the L$16 billion, which has not have been finalized; the matter of how the mop-up exercise was handled has not been addressed, whether the CBL has put in measure to ensure most currency flows through the banking system as 90 percent of the currency [exists] outside the banks.”
GAC continued: “What policies has the CBL put in place to curb possible counterfeit monies on the market; and what measure will be put into place to prevent the hoarding of cash?
“Additionally, from the printing and handling of the L$15 or L$16 billion, it is quite apparent for all to see that CBL does not have adequate internal controls, and is thus ill-equipped to function at its best, which the Kroll and GAC reports attest to,” the communication said.
Though House speaker Bhofal Chambers is yet to speak on the leaked of the communication, the GAC’s communication however commended the Legislature on its recent stance, denying the President’s request to print more Liberian paper currency.
The GAC added, “I strongly recommend that, as the first branch of government, you not only find ways to forestall the morass, but also delve into the reasons we are in this predicament.
Recently, Montserrado County District #8 Representative Acarous Moses Gray, an Executive Committee Member of the ruling Coalition for Democratic Change (CDC), said printing of the new banknotes will help the CDC government to put smiles on the faces of civil servants (many of them have not being paid for several months.)
In a sharp response to critics on social media, he posted: “Printing of money will also help pay our civil servants on time for the Christmas’ break, but you are kicking against it because you believe that if civil servants are not paid on time, they could join the so-called Weah must resign failed protest.”
Rep. Gray argued that the significance of the printing of new Liberian banknotes by the Weah administration cannot be overemphasized.
There have been mixed reactions concerning the printing of the new money, which some Liberians believe is to further enrich the already “corrupt regime”, while others are of the opinion that it would strengthen the fragile economy of the country.
Well placed sources have informed this newspaper that the “new controversial money” has already been printed, but is simply awaiting the formality of the Legislature’s approval, in fulfillment of Article 34 (d) of the Liberian Constitution, which gives the Legislature to “issue currency [and] mint coins,” for circulation via the various banks. According to sources, this is the main reason for the President’s call on the Legislature to cut short their break to return before the festive season.
In keeping with the Constitution, the legislature returns from the annual break in the second week of January but, due to the urgency government attaches to the approval of the new currency, the lawmakers have been asked to return on November 18.
Article 32 of the Liberian Constitution states: “The Legislature shall assemble in regular session once a year on the second working Monday in January.”
However, the ‘B’ part says: The President shall, on his own initiative or upon receipt of a certificate signed by at least one-fourth of the total membership of each House, and by proclamation, extend a regular session of the Legislature beyond the date for adjournment or call a special extraordinary session of that body to discuss or act upon matters of national emergency and concern. When the extension or call is at the request of the Legislature, the proclamation shall be issued not later than forty-eight hours after receipt of the certificate by the President.