Fractures affect Libyan central bank

Some financial and economic institutions in Libya are still divided – namely the Central Bank of Libya – despite the recent creation of Libya Government of national unity headed by Prime Minister Abdul Hamid Dbeibeh.

Dbeibeh’s government took power on February 5 and a new Presidential Council headed by Mohamed al-Menfi was elected at the Libyan Dialogue Forum, held under the auspices of the UN in the presence of 73 Libyan personalities from various regions.

In this context, Salama al-GhwailThe Libyan Minister of State for Economic Affairs told Al-Monitor: “The government of national unity was established after years of political and administrative division in Libya, and the unification of economic and financial institutions will therefore have a positive impact. ”

He added: “The unification of the ministries of finance and economy allowed the government to make progress in a short time, and the effects of this process began to appear gradually, especially in the preparation a unified budget, planning policy and payroll system. “

Ghwail noted, “The main economic issues we face are how to unify revenue and expenditure, as well as how to limit public debt,” while the country’s central bank remains divided. “The new government will also work to solve the unemployment problem, create jobs, diversify sources of income and improve incomes in a way that encompasses the whole country.”

“Security concerns prevent the improvement of trade [within Libya] and unify the work of banks due to road closures. If the security crises are resolved, the liquidity problem will be resolved, ”he said.

Despite renewed efforts to find a solution in Libya, the main coastal road connecting the east of the country to the west remains closed as armed groups continue to block the road, hampering trade movements across the country.

Although some economic issues were resolved once the new government took over, namely the drafting of a unified state budget, the new vice-chairman of the Libyan Presidential Council, Musa al-Koni, said May 6 press conference, “Much has been accomplished in terms of unifying state institutions, but we are [still] pending the unification of the financial institution ”, referring to the central bank.

There are still two central banks in Libya: the internationally renowned Central Bank of Libya based in Tripoli and headed by Siddiq al-Kabir, who has served for 10 years and is affiliated with the Muslim Brotherhood, and another central bank headed by Ali al-Hibri in eastern Libya.

May 5 informed sources told Sky News Arabia that “the Muslim Brotherhood in Libya is seeking to disrupt new appointments to sovereign positions because the candidate lists did not include their former affiliates, especially for the post of governor of the central bank.”

March 24 Sky News Arabia had published an article on Kabir titled “Libya: One Civil Servant, Eight Governments”, in which he said: “Despite Libyan numerous attempts to fire Kabir, none have succeeded given the pressure from his supporters and the Brotherhood appears to be funding and serve the ideological objectives of the Brotherhood.

The article added: “The international forces supporting the Muslim Brotherhood (referring to Turkey) attach great importance to the central bank and Libyan wealth, while at the same time supporting the armed militias that control the central bank.”

The Central Bank of Libya plays a major role in the Libyan economy, as it is responsible for managing and issuing banknotes and coins and preserving Libyan monetary stability at home and abroad. He is also in charge of managing the state’s gold and currency reserves while overseeing local banks.

On April 28, the Libyan parliament completed the final candidate lists for sovereign positions, in addition to the position of the governor of the central bank, whose list did not include Kabir. The parliament submitted the lists to the Supreme State Council for review before the final vote in parliament. However, on May 1, the Supreme State Council, headed by Khaled al-Mishri, a former leader of the Muslim Brotherhood, rejected list candidates for sovereign positions.

“The central bank will soon be unified; it is an urgent and important step for the Libyan economy ”, noted Mr. Ghwail.

Speaking of the control of armed militias over Tripoli’s central bank, he said: “Under the circumstances the country went through, there were gaps in the work of all institutions, not just the central bank. Perhaps one of the priorities of the legislative, presidential and prime minister’s bodies is to correct deficiencies in all sectors. “

He stressed: “The petroleum sector is experiencing significant and clear improvement, and the production and export processes are going well, as political and security stability have indeed contributed to it.”

Ghwail explained, “The Ministry of Petroleum and the National Oil Corporation are working together to develop the sector and achieve the highest efficiency rates in order to compensate for the downtime, production stoppage and lower income. “

Similarly, Ramzi al-Agha, head of the Central Bank of Libya’s liquidity crisis commission at al-Bayda (the parallel central bank), told Al-Monitor: has no positive economic impact for the unification of governments. The problem of employee salary deferral is ongoing, and the most important financial institution, the central bank, continues to suffer from the division due to Kabir’s control for 10 years.

Libyan officials have suffered from a salary delay for years due to the division of financial institutions. The National Human Rights Commission in Libya has condemned the delay salaries of civil servants, describing the move as a violation of the economic and social rights of the people.

Agha explained, “The unification of the central bank is hampered by the influence of Kabir and the failure to elect a new governor, which is the first step in the process of unifying the central bank.”

“This unification will result in unifying financial data and commercial bank balances and will facilitate the purchase of hard currencies,” he said.

“It is crucial to unify the central bank and elect a national personality to manage it so that it can carry out exchange rate reforms, eliminate the exchange rate difference between the parallel and official market, put the foreign currency available to all. [regions of the country], and work according to the banking law and not on the whims of the militias, ”Agha said.

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