Husni Bey: Borrowing LYD 10 Billion Won’t Solve Libya’s Spending Deficit: It Will Push It Into the Future

Businessman Husni Bey has clarified his position regarding reports that Libya’s Government of National Unity plans to issue bonds worth LYD 10 billion, stressing that borrowing should not be used simply to finance uncontrolled government spending.

Bey said that he is responding to reports published by a page citing his earlier comments. He confirmed that the reports broadly reflected his position, while providing several clarifications to avoid any misunderstanding.

Husni Bey Calls for Official Details on the Proposed Debt

Bey said that, so far, he considers the reported bond issuance to be unconfirmed information requiring an official announcement specifying the value of the issuance, interest rate, maturity period, subscribing entity, and, most importantly, the purpose for which the borrowed funds would be used.

He emphasized that he does not oppose public borrowing in principle.

According to Bey, borrowing is a legitimate financial tool when it is used to finance productive assets or projects that generate an economic return greater than the cost of the debt and create the future capacity to repay it.

Borrowing for Current Spending Would Only Delay the Problem

Bey argued that if the proposed borrowing is intended to finance current expenditure or additional spending beyond a disciplined fiscal ceiling, it would not solve the underlying problem.

Instead, it would postpone the problem while adding interest costs.

For example, if Libya borrows LYD 10 billion at an interest rate of 6%, annual interest payments alone would amount to LYD 600 million, before repaying any portion of the principal.

“Why Does the State Need More Dinars?”

Bey questioned why the state would need to borrow additional dinars when, in his view, Libya’s fundamental problem is not a shortage of dinars.

Rather, he argued that the issue is the volume of dinars injected by the state compared with what the economy produces and what oil revenues and foreign currency inflows can absorb.

He explained that the overwhelming majority of Libya’s real resources come from oil and gas revenues denominated in U.S. dollars, while government revenues collected domestically in dinars through taxes, customs duties, fees, and other sources represent only a small portion of total public expenditure.

New Domestic Debt Does Not Create New Wealth

According to Bey, adding new domestic debt without reforming the structure of government spending does not create new wealth.

He also clarified a statement previously attributed to him that may have caused some ambiguity.

He explained that when banks purchase government bonds or subsequently monetize the debt, any resulting expansion in the money supply could increase liquidity and demand for foreign currency, while also contributing to inflation.

This, in turn, could put pressure on the Libyan dinar and drive up the dollar’s value against it.

Bey said this is more accurate than simply describing the outcome as a “rise in the exchange rate.”

Libya Needs Spending Discipline, Not More Financing

Bey summarized his position by saying that Libya does not currently need another mechanism to finance additional spending as much as it needs a clear framework governing the size, composition, and financing of public expenditure.

The key question, he argued, is not how to find another LYD 10 billion.

Instead, the question is how to ensure that the hundreds of billions of dinars spent by the state are consistent with the economy’s productive capacity and the government’s sustainable resources.

He also called for a shift in public spending away from consumption and rent-seeking toward investment and production.

Debt Can Work: If It Finances Productive Assets

Bey stressed that borrowing can be economically justified when it is used to finance a productive asset capable of generating returns.

However, if debt is used to sustain a deficit caused by uncontrolled spending, it does not resolve the deficit.

It simply transfers the deficit into the future while adding interest costs.