Abu Mahara Writes: “Central Bank Data on Revenue and Public Expenditure (Incomplete Transparency)”

Lawyer Ahmed Ali Abu Mahara wrote an article titled: Central Bank Data on Revenue and Public Expenditure (Incomplete Transparency):

There is no doubt that the data issued by the Central Bank of Libya on state revenues and expenditures is an important indicator for understanding the country’s financial situation. Through these reports, one can assess the total revenues generated from various sources such as oil, gas, and taxes, as well as how these revenues are distributed across different sectors. Additionally, expenditure data provides a clear picture of how the government manages its financial resources.

However, when examining the overall legal framework, it becomes evident that revenue collection and expenditure management fall exclusively under the jurisdiction of the Ministry of Finance. This ministry oversees the state’s revenues and expenditures, monitors its income, and manages all government accounts with the Central Bank to ensure proper deposit and spending procedures. This raises a critical question: Who is legally authorized to issue reports on revenue and expenditure data? Is it the Central Bank or the Ministry of Finance? This article aims to clarify the answer.

Libya’s public revenues vary in nature, including oil revenues, taxes, and fees. Oil revenues are the primary source of funding for public expenditures. These revenues are collected through agencies and institutions responsible for managing state income, which is then deposited into the Ministry of Finance’s accounts at the Central Bank of Libya.

As for public expenditures, they involve financial disbursements that the state owes to rightful recipients, such as salaries and similar payments. These expenditures occur through authorizations issued by the Ministry of Finance to the Central Bank, instructing it to release the required funds. All these transactions follow the financial regulations governing such operations.

According to Libya’s legal framework, the Central Bank acts as an agent of the government in all financial transactions. Public revenues are deposited in the Central Bank under the name of the public treasury and placed in the Ministry of Finance’s accounts. These accounts are then used to settle the government’s financial obligations. This process is legally known as treasury operations. The public treasury serves as the link between revenue collection and expenditure, where all types of state income are accumulated, and from which the necessary funds are disbursed based on spending orders issued by the Ministry of Finance to the Central Bank, which then executes the payments.

This legal requirement makes it clear that the Ministry of Finance is the entity responsible for issuing financial reports since it has precise knowledge of both the amounts spent and the revenues collected in the state treasury.

By law, the Ministry of Finance is mandated to produce financial reports compiled from the aggregated reports it receives from various institutions. Article 25 of the Budget, Accounts, and Warehouses Regulations states:

“Assistant financial controllers must submit a monthly report to the financial controller, approved by the head of the respective authority, detailing the revenues collected and expenditures incurred…”

“The financial controller must prepare a monthly report on the ministry’s operations and submit it to the Ministry of Finance after obtaining approval from the Deputy Minister, no later than the end of the following month.”

If the Ministry of Finance does not produce any financial reports—its last published report on its website dates back to 2022—and there are no accounting reconciliations between the Ministry of Finance and the Central Bank of Libya to verify the actual figures for revenue and expenditure, this lack of reconciliation results in discrepancies between the Central Bank’s data and the records held by revenue-generating institutions such as the National Oil Corporation, the Tax Authority, and the Customs Authority.

Such reconciliation between the Ministry of Finance and the Central Bank is crucial for understanding the country’s true financial situation. Without it, the Central Bank’s unilateral release of these reports raises serious questions about the accuracy of the figures presented.