Liquidity For Festival Or For Election Bid

New coins and bank notes are entering circulation in Liberia. The Central Bank of Liberia has already found itself on the defense, claiming a recent released social media video falsely claims that a portion of the newly printed L$100 bank notes is being diverted to finance President George Weah’s re-election bid.

According to the Sept. 25 issue of the newspaper Front Page Africa, “The CBL, once again, restates that the first L$4 billion brought into the country in November 2021 was used to ensure that there was enough liquidity in the banks for the December and January festive season, while the second L$4 billion brought in February 2022 was used to begin the replacement of mutilated bank notes.”

To the CBL’s credit the U.S. Embassy issued a press statement following the procurement process calling the process a “win for Liberia.” The International Monetary Fund acknowledged the successful implementation of the currency changeover process as a key milestone under the Extended Credit Facility program.

Liberia’s currency reform has taken a long time and has had its twists and turns. The reform is inconsistent with the May 6, 2021 Joint Resolution of the National Legislature authorizing the CBL to print and mint a new Liberian currency system with a face value of L$48.734 billion or about $317.2 million US.

The CBL was instructed to phase out the existing L$10 and L$5 bank note denominations in favor of coins of the same face values. According to the Joint Resolution, “That the denomination of bank notes 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 legislation also mandated the CBL produce these coins and bank notes during 2021, 2022, and 2024 in response to future liquidity anticipated during 2024.

According to the CBL, the new coins are smaller, lighter, and easier to transport than previous coins. The L$5 has a weight of 3.6 grams and depicts President Edward James Roye on the obverse. The new L$10 has a weight of 4.8 grams and features President Joseph Jenkins Roberts. The new denominations are round. Each is composed of nickel-plated steel. This is the first time a bank note of L$1,000 face value has been introduced.

CBL Executive Governor J. Aloysius Tarlue spoke at the launch of the new currency, saying: “CBL is working with other financial institutions to ensure that the process is smooth and successful and wants to encourage the public to open accounts with various commercial banks in the country.”

According to Tarlue, the first infusion of the new Liberian currency will last for seven months and be distributed between Sept. 1 and March 30, 2023. The currency will be distributed through commercial banks for the purpose of accountability, something needed following the accusation some of the new money is going directly towards Weah’s re-election campaign.

Tarlue said, “CBL is working with other financial institutions to ensure that the process is smooth and successful and wants to encourage the public to open accounts with various commercial banks in the country.”

Liberian Senate Chairman of Banking and Currency A. Marshall Dennis supported Tarlue by adding, “So, what is happening here today is all geared towards transforming our economy and I want to thank President George M. Weah for the farsightedness he played in putting his feet on the ground to revamp our economy.”

The CBL has been making efforts to rebuild public confidence in Liberia’s banking sector since the October 2020 amendments to the Central Bank of Liberia Act that gave the central bank more autonomy while mandating the bank to ensure financial stability. With an inflation rate of 6.48 percent in July over that of July one year earlier the central bank has its work cut out for it. The new coins and bank notes are meant to help, but rumors, unsubstantiated or not about where the new currency is going are not helpful.