Al-Farsi Writes: The “Disclosure Surplus Tax”: How Did the Central Bank Become Accused of “Financial Negligence” on Behalf of the Absent?

Written by Central Bank Monetary Policy Committee member Ayoub Al-Farsi, who said in his article:

“The ‘Disclosure Surplus Tax’: How Did the Central Bank Become Accused of ‘Financial Negligence’ on Behalf of the Absent?”

The Central Bank of Libya has recently faced a wave of harsh criticism over delays in, or the suspension of, publishing its periodic data. The irony here does not lie in the demand for transparency itself, which is a right guaranteed to citizens and those interested in economic affairs, but rather in directing accusations at an entity that does not have the relevant mandate and holding it responsible for years of accumulated shortcomings in the public finance sector. It is the story of an institution that volunteered to fill an information gap, only to end up paying the price of this “disclosure surplus” with its credibility, while those with the actual mandate remain silent.

The Trap of Substitute Jurisdiction: When Initiative Shields the Original Negligent Party

For many years, Libya’s economic landscape has suffered from an almost complete absence of data issued by the Ministry of Finance, the sovereign entity and legally mandated authority responsible for preparing and publishing periodic reports on public revenues, expenditures, and the fiscal deficit or surplus. This persistent structural absence has created a major gap and deprived the country of the primary measurement tool needed to assess the government’s fiscal performance.

Faced with this gap, and in an effort to avoid creating an unclear picture for international and domestic institutions, the Central Bank volunteered over the years to publish detailed data covering the state’s public revenues and expenditures. Although this initiative was intended to make information available, it gradually resulted in serious unintended consequences:

1. Confusion among the public: The public became accustomed to seeing the state’s financial figures published through the Central Bank, reinforcing the mistaken impression that the Central Bank is directly responsible for these figures and for the disclosure process itself.
2. A shift in the focus of criticism: As soon as there was a delay in publishing this data, criticism was directed at the Central Bank as if it were the entity with the original mandate that had failed in its duties, while the Ministry of Finance—the actual institution absent from the scene—was completely overlooked.

The most serious consequences of this confusion did not stop at blaming the Central Bank for delays in publishing data. They extended to holding it accountable and questioning it about the state’s fiscal policy. The Central Bank began to face questions about government spending, the expansion of the wage bill, and the efficiency of investment spending—issues that fall exclusively under the authority and implementation of the Ministry of Finance.

Under the Banking Law, the Central Bank’s responsibilities are limited to managing monetary policy, which includes the following areas under its exclusive mandate:

Monetary and banking indicators: Such as the money supply (M1, M2), the volume of bank credit, liquidity, and the assets and liabilities of commercial banks.

The external sector and foreign currencies: The balance of payments, management of official gold and foreign currency reserves, foreign currency sales for commercial and personal purposes, and the determination of exchange rates.

Financial and price stability: Setting rediscount rates, financial soundness reports for banks, and analysis of monetary inflation rates.

The fundamental distinction here is that the Central Bank monitors the actual movement of cash flows through the state’s accounts held with it, but it does not have the legal authority to plan or direct the use of these funds. It publishes records of revenues and expenditures as they are received, while the Ministry of Finance alone is legally responsible for classifying and directing these expenditures in accordance with the General Budget Law.

The Oil Revenue File and the Absence of Governance

The current financial disclosure crisis cannot be separated from the most sensitive issue in the Libyan economy: oil revenues and their cash flows. This area has witnessed financial practices outside the framework of the traditional budget, further complicating the situation.

The “Non-Remittance” Debate: The financial landscape previously suffered from the failure to remit a significant portion of oil revenues to the state’s sovereign account at the Central Bank, with the funds being held in external accounts as temporary exceptional measures. This approach concealed a major portion of the state’s cash flows and created a gap in the reconciliation of actual spending with the official economic cycle, placing the Central Bank in direct confrontation with a shortage of foreign currency liquidity without being responsible for causing it.

Production-Increase Budgets: The lack of clarity surrounding this issue also extended to the National Oil Corporation, which was granted large exceptional budgets amounting to billions of dinars under the heading of “sector development and production increase plans.” Despite the enormous sums deducted from the livelihoods of Libyans, the Corporation refrained from providing transparent disclosures explaining to the public and oversight authorities how these budgets were spent, what projects were implemented, and whether the efficiency of this spending was reflected in the sector’s overall performance.

Finally

The current predicament facing the Central Bank reflects a deeper crisis in the governance of Libyan institutions. The Central Bank has paid the price for attempting to fill the disclosure gap for years, transforming, in the eyes of the public, from an “initiative-taking institution in disclosure” into an “institution accused of negligence,” while other institutions, such as the Ministry of Finance and the National Oil Corporation, have preferred to operate in the shadows, away from oversight and accountability.

Correcting this course does not lie in pressuring the Central Bank to publish information that falls outside its mandate. Rather, it requires raising legal awareness of institutional responsibilities and compelling the parties truly responsible for the shortcomings to return to the platform of accountability and publish their own data, so that the mechanisms of accountability and economic assessment in the country can function properly.