The Political Leader of the Alternative National Congress (ANC), Alexander B. Cummings, has written the Liberian Senate and the House of Representatives on the Central Bank of Liberia’s request to the Legislature for the printing of a new family of banknotes. Cummings said the request made by CBL must be treated with extreme caution and critical analysis before approval is given.
By doing this, he said, it will avoid unintended consequences that may adversely exacerbate the already difficult economic conditions faced by the country. He 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 objective or outcome to be achieved.
“Anything to the 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’,” Cummings’ statement reads.
“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 failures, administrative inefficiencies and mismanagement. 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 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 the resolving of those defects before printing additional money?” the statement continued.
“Here are few issues to ponder as the Legislature consider the CBL’s request: the CBL, by its own admission, has indicated that the total estimated volume of money currently in circulation is 23 billion (twenty-three billion). Why is it requesting the printing of 48 billion (forty-eight billion), a difference of 25 billion, which doubles the original amount in circulation? Has there been a proper audit and accounting of all previous monies printed, including the recent printing of 4 billion (four billion) before the 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, by his own admission, announced the successful subscription of auctioned bonds intended to retrieve Liberian dollars outside 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; the Finance Ministry and CBL are still to fully account for the mismanagement of the 25 million United States dollars. To date, no one has been held accountable; and the GoL is yet to fully comply with the KROLL and PIT’s Recommendations calling for a forensic investigation into the US$25 million ‘mop-up’ fiasco.
“In addition to the above issues, it is confusing for the CBL of late to be heralding the digitization of the economy or the use of mobile money, ATM, and other electronic money transaction systems and at the same time requesting the printing of such huge sum of money, even if it were for reserve purpose. In the absence of proper sanitization of the system and proper accountability and transparency, the problem of LACK OF CONFIDENCE in the banking sector will continue to persist. Also, the printing of huge sum of currency, if not managed properly, especially by what is evidently an inept and incompetent government, will lead to inflation that could worsen the suffering of the Liberian people,” the Cummings letter added.