Libyan businessman “Husni Bey” told our source that a collective agreement was reached among all parties during the banking forum session. He stressed that the Central Bank of Libya should not finance any deficit spending, regardless of pressures, because financing spending through deficits means creating new money, which directly leads to inflation and the collapse of the Libyan dinar’s value.
Husni Bey explained that the law allows the Central Bank of Libya to finance a deficit up to 20% and for only one year, and this financing cannot be repeated until the previous deficit is fully repaid. However, what happened in Libya has been completely different: continuous deficit financing has occurred since 2013 and repeated in subsequent years, reaching nearly 200% instead of 20%—ten times the legal limit, constituting a full violation of the law.
He added that some might argue this is not true, claiming that if the House of Representatives approves a budget and finances it through issuing bonds, would anyone buy these bonds? If citizens or bank deposit holders do not buy them, it is equivalent to creating money, which inevitably leads to inflation and impoverishes the Libyan people. “This is what has happened,” he said, adding, “My personal advice is that the Central Bank of Libya should operate strictly as a bank and stay away from political and governmental pressures. If governments provide money, it should be spent accordingly; otherwise, the bank should not release a single dinar.”
Bey also explained that in the second session of the forum, discussions focused on conflicts of interest, particularly the relationship between the Board of Directors and the executive management. According to governance principles adopted by the Central Bank, there should be a complete separation between ownership (Board of Directors) and executive management.
He further stated that the role of a Board of Directors is globally defined and clear in several key tasks: oversight, planning, ensuring execution, and setting visions, but it should have no involvement in the operational procedures of the bank’s executive management.
Husni Bey concluded his statement to Sada by saying: “Unfortunately, in the Arab world and developing countries, we often mix ownership, the Board of Directors, and executive management. This confusion is the reason why many of our projects and institutions fail.”
