CBL Defends Planned Banknote Printing as Boakai Recalls Legislature, Mixed Reactions Trail Move; Bank Cites Replacement Needs, Economic Growth - FrontPageAfrica

Monrovia — The Central Bank of Liberia has defended its plan to print additional Liberian dollar banknotes as President Joseph Nyuma Boakai recalls the Legislature from its break to deliberate on the proposal amid growing public debate.

By Gerald C. Koinyeneh, Gerald.koinyeneh@frontpageafricaonline.com

In a formal communication to lawmakers, President Boakai stressed the urgency of reconvening ahead of schedule, citing critical national issues requiring immediate attention.

“We acknowledge your communication informing us of the adjournment sine die of the first quarter of the Third Session of the 55th Legislature… However, given the urgency of certain national matters, it is imperative that the Legislature reconvenes prior to that date,” the President stated.

He added that the Special Session will consider “the proposal for the printing of additional Liberian Dollar banknotes, the passage of the 2026 Supplementary Budget, and other matters of national urgency.”

The move has sparked mixed reactions, with supporters viewing it as a necessary economic intervention, while critics warn of potential inflationary risks and policy inconsistency.

Critics Question Policy Shift

Malcolm W. Scott of the Coalition for Democratic Change criticized the plan, accusing current officials of reversing positions they once strongly opposed.

“Not too long ago, the loudest critics of today’s reality stood firmly against what they called poor economic conditions… Yet, in a striking turn of events, the very former opposition critics… are poised to print new banknotes and raise taxes as quick fixes,” Scott said.

He warned that unchecked expansion of the money supply could fuel inflation, weaken purchasing power, and erode household savings.

“It’s a case of more money chasing the same goods—prices rise, wages lag, and savings lose value,” he added, questioning the consistency and long-term vision of policymakers.

Scott further argued that injecting newly printed money into the economy without a corresponding increase in goods and services could trigger severe inflationary pressures. He noted that, amid rising prices, citizens’ purchasing power is already declining, with the poorest being the hardest hit.

He cautioned that if authorities proceed with printing more money to address rising costs, the consequences could be significant.

“The country and its people should brace themselves for currency depreciation, higher import costs, and a general decline in living standards,” he warned.

CBL: Move Is Routine, Not Reckless

The Central Bank, however, maintains that the planned printing is not an expansionary policy but a standard currency management exercise driven by practical needs.

Deputy Director for Research P. Mah Kruah said the primary reasons are the replacement of worn-out banknotes and the need to meet increasing demand as the economy grows.

“Printing is intended to replace the amount of currency that has gotten mutilated. To print, we respond to the expanding economy,” Kruah explained. “When the economy is expanding, the money supply should commensurate with that growth.”

Supporting this position, Senior Technical Advisor to the Executive Governor, Mussah Kamara, highlighted the short lifespan of Liberian banknotes, noting that many currently in circulation are already deteriorating.

“The average lifespan of most banknotes is four years. In our situation, it’s even more peculiar. The current banknotes came in 2021—you can assume that most of them are mutilated,” Kamara said.

He emphasized that maintaining the quality of currency is a core responsibility of the Central Bank.

“The banknotes of Liberia represent Liberians. So, we have to make sure that we always have quality banknotes,” he added.

Balancing Growth and Stability

The CBL further argues that Liberia’s largely cash-based economy makes periodic currency replacement unavoidable, especially given environmental conditions and frequent handling that accelerate wear and tear.

At the same time, officials point to population growth, increased economic activity, and ongoing efforts to strengthen the Liberian dollar as factors driving higher demand for cash.

The Bank insists that safeguards will be in place to prevent inflation, including aligning any increase in money supply with economic growth and using monetary tools to manage liquidity.

At a round table with the the Liberian media on Wednesday, Deputy Director Kruah, flanked by senior bank officials, outlined several key reasons behind the planned printing, stressing that the primary objective is to replace worn-out and mutilated banknotes while meeting growing demand in an expanding economy.

Rising Demand, Worn-Out Currency

According to the CBL, Liberia remains a heavily cash-based economy where banknotes deteriorate quickly due to frequent handling and harsh environmental conditions. At the same time, population growth and increased economic activity have driven up demand for physical cash.

The Bank noted that despite gradual progress in digital payments, public reliance on cash remains high. It also pointed to ongoing de-dollarization efforts, which are increasing demand for Liberian dollar transactions.

Additionally, the CBL cited the need to maintain adequate reserves in its vaults, support its gold purchase program, and strengthen foreign exchange reserves as part of the broader rationale for the planned printing.

Not an Inflationary Move, CBL Insists

Amid concerns about inflation, the Central Bank maintained that printing additional currency does not automatically trigger price increases.

Officials emphasized that the planned issuance will be carefully aligned with key economic indicators, including GDP growth and transaction demand, to avoid excess liquidity in the system.

“The objective is not to flood the market with cash,” the Bank indicated, “but to meet transactional needs and replace unfit notes.”

To further guard against inflationary pressures, the CBL says it will deploy monetary policy tools such as open market operations and adjustments to reserve requirements to absorb any excess liquidity if necessary.

The Bank also noted that stable exchange rate conditions and improved domestic supply chains should help limit inflationary risks.

Printing Plan Targets 2026–2030

The proposed printing exercise will cover the period from 2026 to 2030, with estimates based on projected economic growth, replacement needs for damaged banknotes, and strategic initiatives such as gold purchases and reserve strengthening.

The CBL clarified that the exercise is not an expansionary money-printing program, but rather a structured and managed process similar to the 2021–2024 currency replacement program conducted in collaboration with international partners.

Safeguards and Oversight

To address concerns about transparency, the Bank outlined several safeguards, including legislative approval, strict procurement procedures, independent audits, and detailed reporting on the printing, distribution, and destruction of banknotes.

The Legislature, the CBL noted, will play a central oversight role by authorizing the total volume of currency to be printed and monitoring compliance through hearings and reports.

The Bank also pledged to strengthen public communication by increasing awareness through radio programs, engaging civil society organizations, and consulting international partners such as the IMF.

Public Confidence Key

The CBL acknowledged that speculation and misinformation could undermine confidence in the process, pledging to maintain transparency before, during, and after the printing exercise.

It said regular updates will be provided to both lawmakers and the public to ensure clarity on the rationale, scope, and implementation of the plan.

Despite reassurances, public reaction remains divided, with some citizens welcoming the move as necessary to address cash shortages, while others remain cautious, urging strict oversight to prevent economic instability.

As the Legislature prepares to reconvene, the debate over Liberia’s next currency printing exercise is expected to intensify, placing both policymakers and the Central Bank under heightened scrutiny.