As the 55th National Legislature convenes to deliberate on the Central Bank of Liberia’s (CBL) request to print L$79 billion for the 2026–2030 cycle, Liberia stands at a crossroad between monetary replenishment and macroeconomic peril. While the executive management of the CBL frames this as a technical necessity to avoid a liquidity crunch, a deeper analytical dive reveals a proposal built on theoretical standardizations that ignore the peculiar, “enclave” nature of the Liberian economy.
By: Paul Columbus Collins (Iron Pound)
To safeguard the actual purchasing power of the Liberian citizen—we must deconstruct the structural contradictions inherent in this proposal.
The bedrock of the CBL’s computation is the Quantity Theory of Money, specifically using Nominal GDP growth (projected at 5.6%) as the primary driver for currency demand. In a diversified economy, this math is sound. In Liberia, it is a fallacy.
Our GDP is dominated by capital-intensive extractive sectors—iron ore and rubber—where the value addition and proceeds are largely held in offshore accounts. This “Growth Without Development” paradox means that while the GDP statistic rises, the actual domestic demand for Liberian Dollars remains flat. By printing LRD against “hollow” GDP figures that don’t repatriate, the CBL is not supporting growth; it is creating an oversupply of local currency that has no destination other than the foreign exchange market.
The CBL is also currently championing a digital revolution, pushing for Mobile Money interoperability, Electronic Funds Transfer (EFT) for payroll, and the Real-Time Instant Payment System (RIPS). In economic theory, as the velocity of money increases through digital speed, the physical quantity of money required decreases.
Yet, the CBL’s proposal asks for the largest physical print in our history (339.7 million notes) while simultaneously trying to digitize the economy. You cannot argue that the future is cashless while requesting a mountain of new paper. This suggests that either the Bank lacks confidence in its own digitalization drive, or it is ignoring the impact of velocity on its printing models.
Perhaps the most alarming analytical oversight is the management of seigniorage—the “profit” the CBL earns from printing. At an exchange rate of L$185/US$1, the seignioragefrom the previous L$48.7 billion print was an estimated US$241 million. The projected profit from this new L$79 billion request is a staggering US$392 million.
Where did the previous US$241 million go? In a country with high dollarization and a “mattress economy” where 95% of cash sits outside banks, these profits are a dangerous lure. If seigniorage is used to mask the CBL’s operational deficits or to fund unbudgeted fiscal gaps, it becomes a hidden “inflation tax” on the poor. The Legislature must demand a segregated, audited account for these funds before authorizing a single new note.
The CBL often cites “low inflation” as a green light for expansion. However, as I have argued on social media under the “Iron Pound” moniker, Liberian inflation is asymmetric. Retail prices rise instantly when the LRD weakens but remain “downwardly sticky” when it strengthens.
The mere announcement of a L$79 billion injection sends a signal to informal market-makers to pre-emptively hike prices. When 95% of currency is outside the banking system, the street—not the CBL—dictates the exchange rate. Printing more money into a market where the Bank has lost custody of the current supply is like trying to fill a bucket that has no bottom.
The CBL proposes a “Gold Purchase Program” to back the new currency. While theoretically sound, sterilization is expensive. To “mop up” the L$14 billion intended for gold purchases, the CBL must issue high-interest bills to commercial banks. If the government continues to borrow from those same banks to fund payroll, the liquidity is never truly “mopped up”—it is simply recycled, leaving the economy vulnerable to the very inflationary pressures the CBL claims to mitigate.
The 55th Legislature must not view this as a routine administrative approval. This is an invitation to a massive economic experiment. Before granting authorization, the Legislature should demand:
● A Consolidated Destruction Audit: Physical proof that the previous L$25.8 billion in legacy notes were actually destroyed.
● A Binding Sterilization Roadmap: Quantitative targets for liquidity absorption that the CBL must hit before infusing the next quarterly batch of cash.
● A Seigniorage Accountability Framework: A clear report on how the US$241 million from the last cycle was spent.
Liberia does not suffer from a lack of paper; we suffer from a lack of monetary credibility. If we print L$79 billion without addressing these structural flaws, we aren’t just printing money—we are printing the next cost-of-living crisis.
