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Annual Report January - June 2000
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3. Open Market Operations
Against the background of relatively low inflation, monetary operations of the Bank of Sierra Leone (BSL) during the year 2000 were conditioned largely by the desire of the authorities to steer interest rates to levels consistent with the objective of stimulating higher investment and sustainable growth in the economy. To this end offer amounts of government securities in the primary market were varied from time to time. New issues were supplied mainly from conversion of Ways and Means Advances.
(i) Treasury Bills and Treasury Bearer Bonds
As a result of active monetary operations during the first quarter of the review period, supply of new Treasury Bills increased but the amount was gradually reduced thereafter resulting in lower offer amounts than maturities. At the end of the review period total Treasury Bills outstanding amounted to Le94,795.50mn reflecting a Le5,252.70mn reduction on the previous year's level. Treasury Bill Holdings by the banking system dropped by Le 17,922.00mn whilst there was an increase in the non-bank public sector of Le 12,670.00mn. Le 8,676.00mn of this was held by the First Discount House which started operations in February.
Total Treasury Bearer Bonds outstanding at the end of the review period was recorded at Le47,337.30 million which was Le16,546.15 million higher than the previous year's level. The non-bank public continued to hold the greater share of the bonds with its share of the total increasing from 78.00 per cent to 81.00 per cent.
4. Local Currency Management
(i) The 2000 Leones Currency Notes
As a result of active monetary operations during the first quarter of the review period, supply of new Treasury Bills increased but the amount was gradually reduced thereafter resulting in lower offer amounts than maturities. At the end of the review period total Treasury Bills outstanding amounted to Le94,795.50mn reflecting a Le5,252.70mn reduction on the previous year's level. Treasury Bill Holdings by the banking system dropped by Le 17,922.00mn whilst there was an increase in the non-bank public sector of Le 12,670.00mn. Le 8,676.00mn of this was held by the First Discount House which started operations in February.
The 2000 Leones note was launched on May 2nd 2000. It is the 12th note in the family of currency notes launched and circulated since the establishment of the Bank 36 years ago.
Of the twelve series of currency notes in the family only five are in effective ciruclation namely the 5000, 1000, 500, 100 and 50 Leones notes. The 2000 Leones note therefore, increases the number of notes in effective circulation to six.
The decision to issue the 2000 Leones note, which prevailed over the issuance of a denomination higher than 5000 Leones note, was based on the following reasons:
1. The transaction convenience of the 2000 Leones note given the huge differential between the existing 1000 and 5000 Leones notes.
2. Recent economic developments have resulted in the gradual appreciation of the Leone against major currencies whereby the 2000 Leones note now approximates 1USD and GBP0.66. It is therefore a convenient unit of account.
3. The Bank wanted a note that will synchronise with the New Millennium - the Year 2000. Although the target date of January was not met due to printing and technical reasons, yet it was launched just at the beginning of the second quarter of the year.
(ii) Withdrawal of Le5000 G/17 Currency Notes from Circulation
As a result of the proliferation of counterfeit Le5000 (Five thousand leones) notes in circulation mainly bearing the G/17 series and in order to forestall further printing and circulation of those notes, Management gave notice in accordance with Section 26(3) of the Bank of Sierra Leone Act 2000 for the withdrawal from circulation of all currency notes of Le5000 denomination bearing serial Nos. G/17 000001 to G/171000000 namely 1,000,000 (One Million) notes with total face value of Le5, 000,000,000 (Five billion Leones).
As at 31st December 2000, 797,005 (Seven hundred and ninety-five thousand and five) currency notes with total face value of Le3,975,010,000 had been received from the commercial banks
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