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Author: Amira Cherni

From Cash Liquidity to Structured Salaries: A Data-Driven Analysis by Abu Sriwil

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Dr. Yassin Abu Sriwil, an international trade expert, delves into Libya’s escalating economic challenges, revealing the impact of unstable financial policies on citizens and their families. In his article, he likens public salaries—an essential right—to credit facilities, questioning the current mechanisms and their repercussions.

The Core Issue: Numbers Speak

  1. Delayed Salaries
    • Public sector employees, 70% of Libya’s workforce, face salary delays averaging 60-90 days, leaving them financially vulnerable.
  2. Increased Demand for Cash
    • Cash demand surged by 25% in 2024 compared to 2023.
    • Black market cash transactions exceed 40 billion Libyan dinars annually.
  3. Imposed Credit Facilities
    • Credit system deductions reach 60% of actual salaries.
    • Digital payment withdrawals incur additional fees of 1-5%.

Role of Key Institutions

  1. Central Bank of Libya
    • Promised full liquidity by November 2024 but revised projections to 2025.
    • Despite lifting withdrawal limits, citizens bear extra costs under credit facilities.
  2. Government
    • Public spending hit 112 billion dinars in 2023, with 40% allocated to salaries.
    • Projections for 2024 indicate a 30-40% rise due to political divisions and duplicate spending.

Consequences of Current Policies

  1. Increased Black Market Reliance
    • Citizens lose 10-15% of their salaries obtaining cash.
    • Black market salary transactions exceed 5 billion dinars annually.
  2. Shadow Economy Growth
    • The informal sector expanded by 35% in five years, now contributing over 40% of GDP.
  3. Financial Drain on Families
    • Families spend 15-20% of their monthly income to bridge gaps caused by delayed salaries and high banking costs.

Proposed Solutions

  1. Regular Cash Flow
    • Ensure monthly cash injections of at least 10 billion dinars into banks.
    • Standardize salary disbursement by the 5th of every month.
  2. Reducing Black Market Dependency
    • Monitor money exchange offices with high-interest rates.
    • Launch government platforms for timely electronic salary transfers.
  3. Transparency and Anti-Corruption Measures
    • Address banking corruption draining 15% of GDP.
    • Reform subsidies to target productive sectors effectively.
  4. Formal Economy Boost
    • Increase investments in infrastructure and essential services by 10% annually.
    • Implement flexible policies to reduce the informal economy by 5% annually.

Conclusion
Amid central bank delays and government shortcomings, Libyan citizens remain the most affected. Sustainable solutions grounded in accurate data and political will are essential. Transforming salaries from a burden to a stabilizing economic tool can restore family stability and reduce reliance on the informal economy.

Withdrawing Money from Libyan Banks: A Challenging Path as Al-Monitor Highlights Financial System Collapse

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Published by: Al-Monitor on Wednesday

Libya’s financial crisis has forced many citizens to rely on payment cards amid the collapse of the financial system, following over a decade of instability and war. According to Al-Monitor, cash withdrawals have become an arduous process, with long queues of hundreds of people waiting outside heavily guarded banks. Often, cash reserves run out early due to severe liquidity shortages.

Lack of Trust in the Banking System

The report highlights that mistrust in the financial system has led Libyans to hoard cash rather than depositing it into banks. Currently, banks limit withdrawals to 1,000 Libyan dinars (approximately $206) per transaction. This mistrust exacerbates delays in the payment of salaries to government employees, who make up the majority of Libya’s workforce.

Transition to Digital Payments

In cities like Misrata, a significant coastal and commercial hub, the population of 400,000 is increasingly turning to bank cards. However, this shift is not without hurdles. The scarcity of ATMs and the lack of card payment acceptance among vendors pose challenges to a cashless economy.

A Misrata resident mentioned that using payment cards has simplified shopping, reducing the need to carry large sums of cash.

A Divided Central Bank

Political turmoil has further fragmented Libya’s financial institutions. Since 2014, competing factions have printed multiple versions of 50-dinar banknotes. To combat counterfeit currency, the Central Bank of Libya announced the withdrawal of these notes in April, initially setting a deadline of August but later extending it to the end of the year.

The withdrawal of these notes has added another layer of complexity. Musab Al-Haddar, a 45-year-old teacher, expressed frustration over shops refusing the old 50-dinar bills.

Addressing the Crisis

To alleviate the current crisis, the Central Bank of Libya injected 15 billion dinars into the economy in late October and urged banks to expedite the issuance of payment cards. However, achieving a seamless transition toward digital transactions requires addressing systemic challenges, such as increasing ATM availability and equipping vendors with card payment devices.

Bloomberg: Libya Contributes to Increasing OPEC’s Production for the Second Consecutive Month

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Bloomberg reported today, Tuesday, that Libya accounted for most of the increase in oil production for the Organization of Petroleum Exporting Countries (OPEC) for the second consecutive month.

Bloomberg confirmed that OPEC produced more than 27 million barrels of crude oil per day in November, an increase of 120,000 barrels compared to October, following Libya’s recovery of its disrupted production.

The agency added that Libya’s production increased by about 110,000 barrels, reaching 1.14 million barrels per day, the highest level since July, after the restart of the Sharara oil field in October.

Al-Harati: “On International Day of Persons with Disabilities, Waha Oil Company Exemplifies Ideal Treatment of Disability as a Humanitarian Issue”

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Hisham Al-Harati, Legal Advisor for the “Zaykom Zina” Organization for the Rights of Persons with Disabilities, wrote: “On this International Day of Persons with Disabilities, while the world celebrates, in Libya, the day often becomes an occasion for fleeting sentimentality, filled with exaggerated expressions of empathy from officials and decision-makers. Sadly, these emotions are often insincere, fading as quickly as the day ends. The focus on disability rights is too often reduced to a single day, followed by the neglect of legal and human rights obligations for the rest of the year.

However, stepping away from this superficiality, it is important to highlight that under Libyan legislation, failure to enforce laws related to the rights of persons with disabilities constitutes a breach of public duty and is considered a criminal offense. Public officials who neglect their responsibilities, including implementing disability-related legislation, can be penalized under Libyan Penal Code. For example, Article 229 stipulates imprisonment for any public employee who neglects their official duties without a legitimate excuse, while Article 230 outlines penalties for misuse of authority or violation of laws and regulations.

Libya’s Law No. 5 of 1987 concerning persons with disabilities, alongside associated regulations and decisions, and the United Nations Convention on the Rights of Persons with Disabilities (of which Libya is a signatory), set forth obligations to ensure the provision of necessary services and facilities for persons with disabilities. Failing to meet these obligations constitutes a legal violation warranting accountability.

In conclusion, it is our pleasure today to commend Waha Oil Company as an exemplary model in supporting and empowering its employees with disabilities. The company has approached disability as a humanitarian matter, adhering to legislation and adopting supportive policies to create an inclusive work environment. It ensures equal opportunities for employees with disabilities to perform their duties alongside others. Such commitment is a testament to justice, equality, and fairness, and it serves as a standard for all institutions to follow.”

With Details: Al-Safi: “The New Leadership of the Central Bank Relies on a Strategy of Providing Market-Reassuring Information”

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Economic expert Mohamed Al-Safi published an article on his page, discussing the use of information as a monetary tool in Libya.

When monetary tools are mentioned, discussions often focus on traditional instruments such as interest rates or exchange rates. However, positive and disciplined communication with the market is an equally significant monetary tool.

The new leadership of the Central Bank of Libya has begun to clearly demonstrate its characteristics, effectively employing one of the strongest monetary tools at its disposal: good communication and information dissemination.

The new management relies on a strategy of delivering information that reassures the market, leveraging the principle that “capital is cowardly” to steer it away from speculative markets and reduce speculators’ impact on the Libyan economy. This strategy is not limited to information sharing but extends to restoring trust through consistent decision-making and defending those decisions in practice. The alignment between declared policies and their transparent implementation fosters confidence in the institution, signaling that the Central Bank has a clear plan and is determined to execute it.

This approach marks a departure from the previous management, which often caused market anxiety and used information negatively (e.g., raising the red flag in 2015), destabilizing the market. In contrast, the current leadership employs realistic reassurance as a tool to prevent market chaos.

Exchange Rate Messages as a Model for Monetary Communication
Messages concerning exchange rates are a prime example of using communication as a monetary tool. The Central Bank has conveyed clear signals about its intention to lower the exchange rate, reducing incentives for capital that had previously engaged in speculative dollar trading for profit. This strategy lessens artificial demand for the dollar as a speculative commodity and promotes its real use for trade and imports.

Liquidity Management and New Banknote Announcement
Regarding liquidity issues, announcing the printing of new banknotes might encourage those holding large sums outside the banking system (so-called “under the mattress” savings) to deposit these funds in banks, fearing future difficulties in using them. This measure could reintegrate part of the money circulating outside the banking system into the official economic cycle.

Challenges to Success
Despite its promising approach, there are risks that could hinder these policies, including:

  1. A decline in oil revenues might weaken the Central Bank’s ability to defend the current exchange rate unless reserves are utilized.
  2. Any disruptions in electronic payment systems or delays in printing new currency could undermine trust in the Bank’s ability to execute its strategy.

Conclusion
Relying on information as a monetary tool reflects a strategic shift in the Central Bank’s management. The aim is to build trust, reduce speculation, and steer the economy toward stability. However, achieving complete success requires addressing external challenges and enhancing coordination between monetary and fiscal policies.

Economic Expert Ibrahim Wali: The Central Bank of Libya Today

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The economic expert Ibrahim Wali authored an article discussing the Central Bank of Libya, emphasizing that the institution is far more than just a governor, deputy governor, and staff. It represents a collective of minds with scientific knowledge and extensive expertise in monetary, economic, commercial, and legal matters. Operating as a structured institution, the bank possesses wide-ranging powers and independence, enabling it to fulfill its purpose in line with global standards for central banks. This equips it to monitor and adapt to developments in central banking both locally and internationally.

Wali highlighted the increasing global trend toward ensuring the independence of central banks, particularly when coupled with patriotism and competence. He underscored the importance of merit-based appointments in central banks, devoid of the scourge of nepotism, selecting individuals with comprehensive knowledge and extensive experience in banking, especially in central banking operations.

He also stressed that expertise in other economic, monetary, financial, and legal areas is essential. Globally, central bankers view managing a central bank as an art form, requiring not only knowledge but also inherent talent honed through learning and experience. This blend of talent, independence, and informed decision-making has been the cornerstone of the success of renowned central banks, whose decisions and announcements are closely monitored by millions worldwide.

Unfortunately, Wali lamented, since the Central Bank of Libya was stormed by military forces, it has become a playground for opportunists, power brokers, and fraudsters. The bank, once a pillar of the Libyan banking system, has lost its prestige and respect. This decline is not limited to the institution itself but extends to its governor, board members, and employees, who face immense pressures and threats from those who disregard banking laws and the objectives of the Central Bank.

He argued that it is time to free the Central Bank of Libya from these intrusions and government interference, while ensuring harmony and coordination among monetary, fiscal, and trade policies. He specifically criticized the “dormant Ministry of Economy” and called for monetary policies that align with broader economic goals.

Wali stressed the urgency of allowing the Central Bank to independently make decisions regarding the regulation of the banking profession, liquidity management, exchange rate monitoring, and the improvement of banking services for ordinary citizens.

Moreover, he advocated for reforming the Central Bank’s human resources systems, offering financial and non-financial incentives to attract top talent. Without such changes, Wali warned, the bank risks losing its governor, board members, employees, and the entire Libyan banking sector, potentially reverting to outdated and ineffective practices—a scenario he hoped to avoid.

African Energy Reveals Gaddafi’s Secret Investments as Libya Lays Claim: Here Are the Details

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The “African Energy” website has disclosed Libya’s demand to the U.S. Departments of State and Treasury in Washington for more than $60 billion worth of Libyan assets, which Tripoli claims were secretly invested in U.S. Treasury bonds by the regime of Muammar Gaddafi.

According to the site, a delegation led by LarMo’s General Director for the Recovery and Management of Libyan Assets, Mohamed Al-Munsali, is expected to meet with U.S. officials in early December to demand the funds. The site cited a knowledgeable source saying that the existence of these assets had remained unknown until now.

The report noted that, starting in the 1990s, the funds were funneled through a complex network to be secretly invested in U.S. Treasury bonds, defying strict sanctions imposed by Washington and other nations on Libya.

Hundreds of bonds were reportedly purchased, some of which have matured while others remain active. This practice continued until shortly before the fall of the Gaddafi regime in 2011. Investigations by LarMo revealed that these funds were never returned to Libya.

The site reported that most of these assets, including bank accounts holding proceeds from expired bonds and coupon payments, are housed in financial institutions based in the U.S. Midwest. These deposits could form a significant portion of the capital requirements for some smaller banks.

It also highlighted concerns within LarMo that these institutions might resist returning the funds due to the potential instability this could cause in parts of the U.S. financial system.

In many cases, ownership of the assets remains unclear. In one instance, a U.S.-registered company, owned by a now-deceased Libyan from Misrata, holds three bonds worth $800 million. The heirs of the original owner are cooperating with LarMo.

The site further revealed that the discovery of these bonds was made through analyzing data extracted from floppy disks found in the home of Gaddafi’s son-in-law and internal security chief, Ahmed Sanussi, shortly after the 2011 revolution. The disks contained CUSIP numbers for the bonds, detailing the securities’ types and maturity dates.

LarMo investigators, with the help of British expert Jonathan Beerman, traced the chain of European business fronts and banks used to channel Libyan funds to the United States.

The report clarified that these bonds are separate from Libya’s frozen sovereign wealth, estimated at $200 billion. This wealth includes real estate, bonds, and financial instruments held in banks worldwide.

The Libyan Investment Authority (LIA) hopes that the UN Security Council will soon lift the freeze on its $70 billion portfolio, enabling it to make new investments and justify current losses, according to the report.

Exclusive: The Central Bank Sends 50 Million to Benghazi to Support Sahara Bank and North Africa Bank Treasuries

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The Central Bank of Libya exclusively revealed to our source that a flight has just departed from Tripoli to Benghazi carrying a cash shipment valued at 50 million dinars. Of this amount, 20 million has been allocated to support the treasuries of Sahara Bank branches in the city, and 30 million is designated for North Africa Bank branches.

This initiative was undertaken under the directives of the Governor of the Central Bank of Libya, Nagy Issa, and his deputy.

Exclusive: The Central Bank Issues Regulations to Facilitate Salary Disbursement Before Reaching Banks – Details Below

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Our source has obtained a circular issued by the Central Bank of Libya to commercial banks regarding regulations for setting purchase limits based on individual salaries. The goal is to facilitate salary disbursement before funds are deposited into banks and to promote electronic payments.

The regulations stipulate that banks must establish purchase limits through electronic payment services they offer, such as electronic cards or mobile applications.

The limit granted to customers is considered a form of Qard Hasan (interest-free loan) and is subject to all its rules, terms, and Sharia-compliant regulations. Key conditions include:

  • No commissions, whether fixed or percentage-based, are to be charged on the overdraft amount.
  • Customers must not be required to subscribe to additional services to receive the limit.

The service is to be offered upon customer request through bank-specific mobile applications, SMS services, or signed forms that outline all product terms and conditions, approved by the bank’s Sharia supervisory board.

Each bank is required to establish policies and regulations for the service, including identifying target beneficiaries, service terms, and the procedures needed to safeguard the rights of both the bank and its customers. Banks may impose conditions for eligibility, restrict usage cases, set specific loan ceilings, or link the limit to the salary value, provided these conditions do not conflict with the bank’s financial policies or legal regulations.

The service is available to bank customers with active current accounts who have been receiving regular salary deposits for at least six months.

The granted limit must not exceed 60% of the net salary after deducting any installments or obligations. The used amount is automatically deducted from the limit when the salary is deposited, and the limit is renewed automatically unless either party decides otherwise.

The bank’s board of directors and Sharia supervisory board must approve the policies, product guidelines, terms, and models, ensuring compliance with regulations issued by the Central Bank of Libya.

Banks are also authorized to take all necessary technical and legal measures to recover their dues in cases where customers fail to prove insolvency. Additionally, banks may refuse to provide a Qard Hasan to clients with a history of defaults or other issues, as determined by approved policies and regulations to mitigate risks.

In light of this, the Central Bank has urged commercial banks to launch the product and prepare their systems to enable the use of these limits for electronic payment transactions in compliance with the aforementioned terms and regulations.

From Tripoli to Benghazi: “Africa Intelligence” Reveals the Journey of the Turkish Oil Company BGN… Here Are the Details

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The French intelligence website Africa Intelligence reported on Monday that the Turkish oil company “BGN” has established itself as a major player in Libya’s oil sector. The Dubai-based company, led by “Roya Baycan,” has succeeded in acquiring the majority of crude oil in Libya.

The website further stated that the Turkish company has become one of the country’s primary fuel suppliers and is now looking to invest in Libyan infrastructure and oil fields, according to the report.

Commenting on the 2023 Audit Bureau Report: Al-Zentouti Critiques State Management and Fiscal Irregularities

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Financial expert Khaled Al-Zentouti penned an article in which he stated: “The 2023 Audit Bureau report spans 570 pages, each one deserving of a case, a prosecutor, a judge, a prison, prisoners, and a jailer.”

He highlighted that the report contains 19 chapters and 579 pages, mostly detailing negative aspects such as resource mismanagement, violations, and corruption. Al-Zentouti added that it barely includes any positive points, except for the Quranic verse:

“O you who have believed, fear Allah. And let every soul look to what it has put forth for tomorrow – and fear Allah. Indeed, Allah is Acquainted with what you do.”
(Al-Hashr: 18)

This verse, according to him, seems like a subtle message from the bureau, as if saying: “Leave judgment to the Creator, as punishment in this world appears unattainable.”

Key Highlights from the Report

Al-Zentouti provided a financial and technical overview of the main points in the report:

  1. Public Spending vs. Revenues:
    • Total public spending reached 174 billion LYD, while sovereign revenues were 175 billion LYD, indicating a positive balance (if the figures are accurate).
  2. Decline in Oil Revenues:
    • Oil revenues in 2023 dropped by 10 billion LYD (6%) compared to 2022, despite higher average daily production and crude oil prices.
  3. Development Expenditures:
    • Allocations for development totaled only 24 billion LYD (13.8% of total spending), marking a 28% decrease from the previous year. This is far below global standards, where development spending often constitutes 60%-70% of total expenditures.
  4. Wage Increases:
    • Salaries rose by 22%, reaching 62 billion LYD, representing 36% of total spending. Al-Zentouti labeled this as a wealth distribution against limited productivity.
  5. Subsidies:
    • Subsidies increased by 9% to 68 billion LYD, about 40% of total spending. A significant portion is smuggled abroad, including fuel sold in neighboring European countries at subsidized rates.
  6. Oil Barter System:
    • Bartered oil transactions totaled 41.2 billion LYD, with no documentation at the Ministry of Finance or transparency regarding pricing mechanisms or procedures.
  7. Public Debt:
    • The central bank reported public debt at 84 billion LYD, excluding debt figures from the eastern region, highlighting the disjointed state of Libya’s financial system.
  8. Telecom Revenues:
    • Revenue from telecommunications amounted to only 506 million LYD (0.25% of total revenue), far below international benchmarks of 4%-8% of GDP.
  9. Customs and Taxes:
    • Customs and taxes contributed a mere 1.6% of total revenue, reflecting the pervasive impact of corruption.
  10. Central Bank Violations:
    • The report pointed to violations at the Central Bank and within the banking sector, undermining the core of Libya’s financial system.
  11. Final Accounts:
    • The state’s final accounts have not been closed for over 16 years, which Al-Zentouti described as evidence of dysfunction, comparing Libya to a “herd being led to the slaughterhouse.”
  12. Audit Bureau Members Harassed:
    • Instances of officials attacking and expelling Audit Bureau members reflect the pervasive corruption and poor governance.

A Call for Accountability

Al-Zentouti stressed that the report reflects a dire need for judicial oversight and extensive reforms. He remarked: “This report requires hundreds of prosecutors, judges, and correctional facilities to address violations across the legislative, executive, and municipal levels.”

He concluded by noting the release of a separate report by the Audit Bureau in Al-Bayda to the Speaker of the House of Representatives on July 30, 2024, and hinted that “what lies hidden may be even greater.”

Spanish Consul in Libya Speaks Reveals Resuming Spanish Airlines and Visa Details for Libyan Citizens

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The Spanish Consul in Libya, Juan Torres, told our source today, Thursday, that “Regarding the resumption of Spanish Airlines, we currently have no information about the airline returning to operate in the capital, Tripoli.”

The consul assured our source that “There is no difficulty for Libyan citizens in obtaining a Spanish visa as long as all required documents are submitted.”

Exclusive: Oil Source Responds on the Oil-for-Fuel Swap Conducted by the NOC

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An oil source, who preferred to remain anonymous, told our source: “What is taking place is a settlement process in exchange for fuel supplies. This mechanism has been in place for nearly two years before the current management board of the corporation took office and was approved by a Cabinet decision. The current board, which inherited this mechanism, has officially communicated multiple times with the Cabinet, requesting a clear budget or financial allocation to purchase fuel and end the swap mechanism.”

The source added: “The swap process involves a settlement account for the value of fuel with entities to which the Oil Corporation exports crude oil, and which are capable of supplying the fuel required by the Libyan state. The settlement account is monitored by the Audit Bureau, the review department within the Oil Corporation, and an international firm that examines the account and provides regular periodic certificates on any violations.”

He continued: “The National Oil Corporation is legally tasked with processes related to fuel provision and crude oil export. However, from my expertise in the fields of oil, gas, and economics, I believe that under the current political circumstances, it is challenging to transition from commodity subsidies to cash subsidies. The simplest prerequisite for cash subsidies is strictness and fair implementation through supervision and monitoring mechanisms nationwide. I think this is difficult to achieve at present!

Exclusive: Central Bank Sends 15 Million LYD to Kufra – Allocation Details

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The Central Bank of Libya revealed in an exclusive statement to our source that it has dispatched 15 million LYD in cash to the southeastern city of Kufra.

The allocation includes 7 million LYD designated for branches of Wahda Bank, 4 million LYD for the safes of North Africa Bank branches, and 4 million LYD for Jumhouria Bank.

This transfer was made under the directives of Central Bank Governor Naji Issa and his deputy. The shipment has just departed from Tripoli.

Exclusive: Al-Harati Comments on Government’s Return to Salary Increase Chaos

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Legal advisor Hisham Al-Harati exclusively told our source: “Any increase in the salaries of state employees must be carried out in accordance with economic and legal controls that ensure financial balance for the state.”

He added: “Raising salaries without a corresponding increase in public revenues poses a direct threat to financial stability and could lead to a general budget deficit, putting the state at risk of bankruptcy.”

According to relevant general legal principles, any adjustment to the salary structure must take into account:

  • Balancing revenues and expenditures: ensuring sustainable financial resources to cover any proposed increases.
  • Preserving national economic stability: avoiding negative impacts on the value of the local currency or heightened inflation rates.
  • Conducting prior financial feasibility studies: demonstrating the impact of the increase on the general budget in both the short and long term.

He concluded: “Therefore, we urge legislative and executive authorities to make responsible and well-studied decisions that strike a balance between improving citizens’ living conditions and maintaining the state’s financial stability.”