The Central Bank of Liberia has been cited by Senators as they expressed concern about the planned infusion of L$4 billion into the economy beginning November this year.
At their second day sitting of the special session yesterday, Senators raised lots of concern as to whether; the new family of banknotes expected next month will end the shortage of Liberian dollars on the market. The Senators’ disquiet comes as about L$22.5 billion, representing 89.4 percent of the money in circulation, remains outside the banking sector – forcing the country to once again suffer from currency shortage despite past infusion from the CBL running in billions of Liberian dollars.
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. Queues outside banks are nowadays common; local currency shortages force commercial banks to restrict cash withdrawals.
Banks in Liberia commonly manage the supplies of cash in their vaults, and with the shortages, they have started to taper withdrawals and hold more deposits. The banks are reliant on their supply from the central bank, and with Liberian running predominantly cash-based economies, banknote shortages hit-hard.
In the past, the CBL has blamed the shortage of banknotes on the issue of lack of confidence in the banking sector, and now, as it anticipates replacing damaged, dirty and overused banknotes, the CBL seems not adequately feeding the commercial bank with cash—holding on to the old money. Although the life cycle of a quality banknote is five years at best, the situation is challenging in tropical environments like Liberia, where the use of cash is high.
The CBL has also been cited to respond to the Senators' concerns about past money infusion led to the circulation of both new and old banknotes. The Senate and CBL meeting is expected to take place October 26 — centering on an update in the printing of the new family of banknotes to replace the legacy banknotes.
In brief report, Grand Gedeh County Senator and Chairman of the Senate Committee on Banking and Currency, A. Marshall Dennis, said that the Central Bank of Liberia and the printing firm Crane Currency agreed to print Eight Billion Liberian Dollars to ease the tension on the Liberian Dollars during the festive Season.
Senator Dennis told his colleagues that the L$8 billion printed, will come into the country in two phases, air, and sea; with the first L$4 billion expected to arrive in the country by air at end of November 2021, while the second L$4 billion will arrive in the country by sea by next January. It can be recalled that the Legislature, some time ago, approved the printing of L$48 billion of a new family of Liberian Dollars banknotes to replace the mutilated Liberian Dollars banknotes in circulation.
Agriculture Minister summoned
Meanwhile, the Senate had also summoned the Minister of Agriculture to show reasons why she should not be held in contempt by the August Body. Yesterday’s decision of Plenary was triggered by a communication written by Margibi County Senator Jim W. Tornolah Chairman of the Senate Committee on Agriculture, Fisheries and Forestry alleging that the Agriculture Minister and her deputies are putting up a non-compliant posture toward his Committee, thereby impeding the work of the Senate.
The Margibi County Lawmaker also told Plenary that from the commencement of the work of the Agriculture Committee, which has oversight responsibilities on this sector, the Minister and her deputies have refused to remit to the Committee a cooperative attitude despite the many communications sent her to update the Committee on happenings in the sector.
Debating the letter several minutes before the decision was taken by Plenary; majority of the Senators expressed concerns as to the noncompliant behavior toward the plenary of the Liberian Senate by appointed officials of government serving in the Executive branch.
It can be recalled that Minister Cooper was once brought before Senate plenary for non-cooperative attitude exhibited, for which she apologized and pleaded for mercy. Also yesterday the Senate Plenary cited authorities of the Economic Management Team to appear on October 28, 2021, to provide detailed information on the depreciation of the United States dollars and appreciation of the Liberian dollars.
The Senate also wants the team to provide information on basic commodities amid the decrease in the exchange rate.