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Author: Amira Cherni

Exclusive: Al-Shhumi Comments on Central Bank Board’s Decisions, Says Priorities Should Include Reevaluating the Exchange Rate

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Economic expert Suleiman Al-Shhumi spoke exclusively to Sada Economic newspaper, commenting on the recent decisions made by the Board of the Central Bank of Libya during its first meeting, part of a short-term plan aimed at providing a positive boost to the Libyan community and the financial and economic sectors. However, he expressed concerns that the Board’s decisions might have set expectations too high, suggesting they should have been more precise, especially regarding the opening of interbank clearing between the east and west.

He explained that the decision to open interbank clearing requires more than a decree from the Central Bank; it demands genuine intent, with clear, positive steps announced for opening it. This is particularly important because clearing is linked to settling the accumulated public debt held in the Central Bank’s branch in Benghazi. Such a settlement requires a political decision (a legislative decision by both councils) and the Bank’s actual ability to implement it on the ground by carrying out the settlement and opening clearing comprehensively, rather than through the temporary balance transfers previously attempted.

Al-Shhumi added that, in the past, the Central Bank claimed it had opened clearing, but existing issues created obstacles to a full and comprehensive clearing process. The Bank also made optimistic promises for the future, such as implementing lease financing under the 2010 law, though this law may need significant amendments to enable the proper establishment of lease financing companies, along with time to organize it effectively.

He further noted that opening the currency exchanges requires exchange rate stability and an adequate supply of foreign currency, among other conditions that may not be immediately achievable. On investment and deposit usage, he suggested the Board should prioritize applying the law that reinstated traditional interest, passed in 2023, and questioned why this law has not been implemented.

Al-Shuhumi argued that the Central Bank should focus on its core role in managing the exchange rate. He highlighted that the Bank’s statement did not indicate any plans to reassess the exchange rate, nor did it address the tax on foreign currency sales despite court rulings calling for its repeal. While the recent decisions convey a positive and necessary message, he believes some will be difficult to implement. Moreover, the statement ignored key issues central to the Bank’s role, such as exchange rate management, transparency, and how the Bank intends to address the presence of two governments in the country.

Norwegian Ambassador to Libya Discusses Embassy Affairs with Sada: Details Revealed

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Norwegian Ambassador to Libya, Hilde Klemetsdal, spoke to our source on Sunday, stating: “We have no plans to open the Norwegian Embassy in Tripoli, but we do wish to open a consulate.”

The Ambassador confirmed that the issue of the Norwegian consulate was one of the key topics she discussed during her recent visit to Tripoli, not the embassy.

Exclusive: Our Source Confirms Central Bank to Take Urgent Measures for Salary Payments by End of Week

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Our source has confirmed that the Central Bank’s Board of Directors and its Governor will take urgent measures to ensure salary payments are made by the end of the week.

This will be done in coordination with the Ministry of Finance, reassuring Libyans that salaries are a top priority in public spending.

Exclusive: Wali Writes: “For Sustainable Economic Stability and a Constant, Fixed Exchange Rate”

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Economist Ibrahim Wali has written an article exclusively for Sada Economic Newspaper, where he shared his insights:

“To date, the Central Bank of Libya has made commendable progress that is well-received by citizens and the Libyan monetary market. However, these steps are temporary unless they are accompanied by a missing fiscal policy and a dormant commercial policy, notably the Ministry of Economy. One hand cannot clap; the Central Bank cannot last for more than six months to a year without the cooperation of the Ministry of Finance and the Ministry of Economy, which is currently ineffective. Economic policy is formulated at the national level, and it requires the coordination of the three key policies: monetary, fiscal, and commercial.

Sustainable economic stability means a continuously fixed exchange rate, financial stability free from parallel spending and waste of public funds, and a commercial stability reflected in reduced prices for basic goods, medicine, and the necessities of life for the ordinary citizen. This is the responsibility of the Ministry of Economy, which is currently dormant. To date, we have not seen or heard of a meeting that gathers the representatives of the three policies— the Governor of the Central Bank of Libya, the Minister of Finance, and the Minister of Economy— to discuss the intertwined policies. They are each working independently.

It is evident that the Ministries of Finance and Economy are not concerned with fluctuations in the exchange rate. They leave it to the Central Bank to perform a miracle by handling the exchange rate and providing hard currency, which, in turn, depends solely on oil sales. If oil ports are closed or if oil prices fall below $72 per barrel, the Ministry of Finance will be unable to pay salaries.

Reform begins with fiscal policy first, before monetary policy, because fiscal policy controls revenue collection and expenditure. If expenditure contradicts or conflicts with monetary policy, it will certainly undermine it. Here, the blame falls on the Central Bank, which is criticized for failing in its monetary policy, but the real issue lies in the fiscal and commercial policies that have not aligned with the monetary policy.

Therefore, it is premature to judge the measures taken by the Central Bank. They represent a step in the right direction, but they are temporary and will not last beyond six months to a year unless fiscal and commercial policies align. Otherwise, the Central Bank will be unable to maintain a stable exchange rate and will struggle to provide hard currency for the two competing governments—one in the east and one in the west—due to parallel spending. The concern with these measures is that they were implemented all at once, which could succeed but is questionable, given the aforementioned risks. They could also fail, leading to worse consequences.

As for this year, I, along with some colleagues in the banking sector, believe the Central Bank should have delayed certain measures until a meeting with its board of directors could formulate a strategy for monetary policy. This meeting should include the Ministries of Finance and Economy to establish a unified national strategy for monetary, fiscal, and commercial policies aimed at ensuring exchange rate stability, controlling parallel spending, consolidating a unified budget for both governments, and addressing food and medicine prices to improve the living conditions of the Libyan people. This approach is essential to avoid a scenario where monetary policy remains stable temporarily, but a year later, things could take a turn for the worse, God forbid.”

Exclusive: Parliamentary Sources: No Current Signs of a 5% Tax Reduction Amidst Calls for Clarification on Its Purpose with the Pending Cancellation at Year-End

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Parliamentary sources have revealed to Sada Economic Newspaper that the proposal from the Central Bank of Libya to reduce the 5% foreign currency tax has not been approved. The proposal, which is part of a broader study, also included a plan to eliminate the tax by the end of this year. However, there are currently no indications of the tax being reduced to 15%, as suggested by the governor and his deputy.

The source added that the Speaker of the House of Representatives has requested clarification on the reasons behind the proposed reduction and its potential consequences, especially since the proposal coincides with the scheduled cancellation of the tax, as stipulated in a decision by the Speaker of the House. The decision, issued earlier, calls for the elimination of the tax by December 31, 2024.

Exclusive: Wali Writes: “Toward a Sustainable Economy and Stable Exchange Rate”

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The economic expert, Ibrahim Wali, penned an article exclusively for our source, stating:

“To date, the Central Bank of Libya (CBL) has taken commendable steps appreciated by citizens and the Libyan monetary market. However, these steps are temporary unless accompanied by the missing fiscal policy and the dormant trade policy under the Ministry of Economy. One hand cannot clap alone, and the CBL cannot sustain these measures for more than six months to a year without cooperation from the Ministry of Finance and the failed Ministry of Economy. Economic policy is not crafted by one entity but requires the synchronization of three pillars: monetary, fiscal, and trade policies.

Economic Stability Requires Coordination
Sustainable economic stability hinges on maintaining a continuous and stable exchange rate, fiscal stability free of parallel expenditures and public fund mismanagement, and trade stability represented by lower prices for essential goods such as food and medicine. This responsibility falls on the “sleeping” Ministry of Economy. To date, there has been no meeting uniting the heads of the three policy pillars—CBL Governor, Minister of Finance, and Minister of Economy—at a single table to address these issues collectively. Instead, each operates in isolation.

It is evident that the Ministries of Finance and Economy show little concern for fluctuations in the exchange rate, leaving the CBL to perform miracles to stabilize it and secure foreign currency—largely dependent on oil revenues. If oil ports are shut down or international oil prices drop below $72 per barrel, the Ministry of Finance will struggle to pay salaries.

Fiscal Policy: The Starting Point for Reform
Reform must begin with fiscal policy, as it governs revenue collection and expenditure. When spending conflicts with monetary policy, it inevitably undermines monetary stability. Consequently, criticisms of the CBL’s monetary policy failures are misplaced; the root cause lies in unaligned fiscal and trade policies.

Temporary Measures with Uncertain Outcomes
While the CBL’s recent measures are a step in the right direction, they remain temporary—likely effective for six months to a year unless fiscal and trade policies align. Without this coordination, the CBL will be unable to maintain exchange rate stability or supply foreign currency to two competing governments—one in the East and another in the West—amid parallel expenditures.

The decision to implement these measures all at once is a point of concern. While it may succeed, the risks are significant, and failure could result in worse outcomes than before.

A Call for Comprehensive Strategy
Many experts, myself included, believe the CBL should have waited to implement its measures until its Board of Directors convened to outline a cohesive monetary strategy. This should have been followed by collaborative meetings with the Ministries of Finance and Economy to develop a comprehensive strategy for Libya’s economic policies. Such coordination is essential for achieving sustainable exchange rate stability, addressing parallel expenditures, unifying the national budget, and tackling the rising costs of essential goods and services.

Without this broader strategy, the current measures offer only short-term relief. If no action is taken within the next year, the situation risks deteriorating to levels worse than before—God forbid.”

New Details Regarding the Sale of the French Partner’s Share in Sahara Bank to Local Companies

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A private source, in a statement to Sada Economic Newspaper, expressed surprise over the refusal to sell the French partner’s share in Sahara Bank to two local companies, despite their right to own 19%.

The source denied referring to the transaction as a theft, emphasizing that it was a legitimate sale between the French partner and the two companies, contrary to what has been circulated on some social media pages.

The source explained that this issue dates back to 2011, following the suspension of the French company’s activities. The partner had offered its share for sale on the stock market, and the two companies purchased it. The source confirmed that no legal action has been taken regarding the matter, indicating that there were no issues with the transaction, except for some delays caused by certain parties.

Furthermore, the source confirmed that all relevant authorities were notified about the sale process as early as July, and no objections were raised at the time.

New Details Regarding the Sale of the French Partner’s Share in Sahara Bank to Local Companies

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A private source expressed surprise in a statement to Sada Economic over the rejection of the sale of the French partner’s share in Sahara Bank to two local companies, despite their right to a 19% contribution.

The source also rejected labeling the transaction as theft, emphasizing that it is a sale and purchase agreement between the French partner and the two companies, contrary to what is being circulated on various platforms.

The source clarified that this matter dates back to 2011, following the freezing of the French company’s activities. The partner subsequently offered its share for sale on the stock exchange, and it was purchased by the two companies. They confirmed that no legal case has been filed in this regard, further proving there are no irregularities in the transaction except for obstructions by certain parties.

The source also noted that all relevant authorities were informed about the sale process last July, and no objections were raised regarding the sale.

Exclusive: Shipment of 100 Million Dinars in Cash Arrives in Benghazi, Distribution Details Announced

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The Central Bank of Libya exclusively revealed to our source the arrival of a cash shipment worth 100 million dinars to Benghazi. Of this amount, 60 million dinars have been allocated to support branches of Wahda Bank, while 40 million dinars are designated to bolster the vaults of North Africa Bank branches in the eastern region.

This distribution is in line with the Central Bank’s plan and the directives of the Governor and Deputy Governor of the Central Bank of Libya.

British Site: After years of negotiations, the UN is expected to unfreeze $70 billion of Libyan assets abroad

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The British website Geopolitical Monitor reported that the Libyan Investment Authority expects the United Nations to unfreeze its $70 billion assets by the end of the year. After a series of institutional reforms and years of negotiations with the UN Security Council, the unfreezing of assets would enable the fund to make new investments and transfer capital from accounts with low interest rates.

According to the website, an audit conducted by Deloitte in 2020 revealed that the Libyan Investment Authority suffered a potential loss of $4.1 billion in returns on its equity portfolio since the freeze began in 2011. Since 2019, the Libyan Investment Authority has sought to implement a major transformation program that would allow the fund to compete with similar sovereign wealth funds in the Middle East. This program includes capacity building, increased transparency, and working with the UN to lift the asset freeze through a four-step transformation plan.

The website also mentioned that the UN Security Council passed Resolution 2701 in October 2023, agreeing to consider changes to the asset freeze. The investment plan presented in March 2024 outlined short-term strategies and reallocations that the Libyan Investment Authority plans to pursue once the freeze is lifted, including recovering losses.

The ongoing challenges faced by the Libyan Investment Authority have been complicated by the significant decline in the value of its holdings. An audit conducted in 2012 revealed that about 40% of the 550 companies affiliated with the institution were unprofitable and needed to be sold. Twelve years later, many companies are likely still unprofitable, increasing the need for a comprehensive restructuring of the institution’s assets. Furthermore, the inability to uniformly enforce the asset freeze has allowed new deals to be made since 2011, many of which were not reported in audits and surveys of the Libyan Investment Authority’s assets, hindering regulatory efforts to estimate its full portfolio.

The transformation plan of the Libyan Investment Fund was launched in 2019. Since then, the CEO and executive team have ensured that the Libyan Investment Fund provides annual reports to the International Forum of Sovereign Wealth Funds, a leading forum for transparency and governance in sovereign wealth funds, in line with the Santiago Principles.

These efforts have greatly improved the transparency of the Libyan Investment Fund, with GlobalSWF ranking the Libyan fund 51st among 100 sovereign wealth funds in terms of sustainability and governance for 2024, compared to 98th in 2020.

The website emphasized that this institutional transformation has strengthened the Libyan Investment Authority’s position within the UN Security Council to request the lifting of the asset freeze. While the investment proposal submitted to the UN in March 2024 only outlines a short-term plan, the Libyan Investment Authority maintains a long-term strategy that will be implemented once access to the frozen assets is granted.

The website also noted that while the document submitted to the Security Council remains confidential, the Libyan Investment Authority’s 2021-2023 strategic document highlights its future aspirations. The first step in its strategy addresses three problematic areas: building trust, capacity building, and developing better investments. While the first two areas have largely been addressed since 2020 through internal reforms, the third remains incomplete, partly due to the asset freeze.

The Libyan Investment Authority estimates that other sovereign wealth funds in the same group, especially in the Middle East, achieve annual returns of 6-7%, and the Authority aims to reach this benchmark after the freeze is lifted. Their plan includes reallocating underperforming assets, bringing in external managers, creating a smart compliance system to maintain a level of international oversight, and unifying asset and portfolio classification across all subsidiaries. An internal investment committee will also be established.

According to the website, the initial reallocation process will mainly derive from cash-strapped assets affected by the freeze and other sanctions. According to the Libyan Investment Authority’s documents, all other assets are likely to remain frozen.

British Newspaper: Aframax Tankers Reach Highest Levels After Return of Libyan Barrels

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The London-based British newspaper TradeWinds reported today, Tuesday, that the utilization rate of Aframax tankers has reached its highest level in four months following the return of Libyan barrels to the market and the lifting of the force majeure.

The newspaper confirmed that production rose to 1.3 million barrels per day on Sunday, according to the National Oil Corporation, which highlighted record levels of production from the Sharara field.

The BRS Group also stated that crude oil shipments are on track to return to full normalcy, according to the newspaper.

Ben Gdara Struggles to Reconcile Haftar and Dbeibeh Amid Resignation Rumors, Lacking Clear Evidence – Nova Agency Reports

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The Italian news agency Nova reported today, Thursday, that in the past few hours, rumors have spread within the Libyan oil sector regarding the possible resignation of the Chairman of the National Oil Corporation, Farhat Ben Gdara.

Nova indicated that rumors, especially on social media, suggest that Ben Gdara has submitted a resignation letter to the Prime Minister of the Government of National Unity, Abdul Hamid Dbeibeh, although there is no official confirmation from relevant authorities at the moment.

Nova reached out to Ahmed Jumaa, spokesperson for the Ministry of Oil and Gas, who stated that he is unaware of any resignation letter submitted by Ben Gdara.

Other sources close to the matter said the resignation was actually due to health issues Ben Gdara has been suffering from for a while. However, other sources suggest that Ben Gdara is facing difficulties in balancing the demands of the armed forces’ leader, Haftar, with the directives of Prime Minister Dbeibeh, making his position increasingly unsustainable, while the regional support he once enjoyed seems to have weakened.

The name of Mohamed Ben Shatwan, the current head of the Arabian Gulf Oil Company and a figure close to Saddam Haftar, one of the most influential sons of “the Marshal,” is being circulated as a potential temporary replacement for Ben Gdara, who frequently travels abroad for medical treatment. However, these may just be rumors, as Nova noted without finding any confirmation.

Africa Intelligence: French Court Rules in Favor of Libya in the “Siba Plast” Case

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The French intelligence site Africa Intelligence reported today, Monday, that a French court has ruled in favor of Libya in the case involving the Siba Plast company.

The site confirmed that the Paris Court of Appeal ordered the cancellation of an enforcement order issued by another French court in 2017 in favor of the Tunisian company, according to the French site.

Unanimously Chosen: Who Is Naji Issa, the New Governor of the Central Bank of Libya?

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In a significant decision, Naji Issa has been unanimously appointed as the new governor of the Central Bank of Libya. This video delves into Issa’s background, highlighting his career and the expertise that led to his selection for one of Libya’s most critical financial roles. Watch to learn about the man tasked with steering the country’s economy through a pivotal time of transition and reform.

El-Manea Writes: “Despite Challenges, Libya Will Be a Destination for Investors and Foreign Capital”

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Advisor Mustafa El-Manea wrote an article published on the American platform Binzenga, stating: Libya will remain a destination for investors and foreign capital.

While national and foreign parties are preoccupied with fueling conflict and exacerbating living conditions in Libya, and despite the overwhelming challenges the country faces, which have led to widespread frustration among Libyans, foreign investors and global economic and development experts remain optimistic. They continue to view Libya as one of the most promising countries for investment opportunities due to its strategic location, abundant natural resources, and open market.

Many of my colleagues and friends in foreign investment funds, international banks, and global development institutions consistently highlight Libya’s untapped market and the highly attractive investment opportunities waiting to be unlocked. For instance:

  • Jean-François Dauphin, Head of the Middle East and North Africa Division at the IMF
  • Rick Perry, former CEO of HSBC North Africa
  • Claudio Descalzi, CEO of Eni
  • Michael Stein, Chief Economist at JPMorgan Chase
  • Alexander Novikov, Head of International Investments at VTB Bank
  • Tom Swan, Investment Director at Citibank
  • Jonathan Walker from Energy Insights
  • Philippe Andrews, Director of Development Finance at the EBRD
  • Andrew King, of Wood Mackenzie
  • Angel Gurría, former Secretary-General of the OECD
  • Maxwell Cook, Investment Expert at BlackRock
  • Mark Bevan, COO of ExxonMobil
  • Matteo Calise, Chief Economist at the AfDB
  • Gerald Meyers, Investment Advisor at Total Energies

…and many others, whose collective insights paint Libya as a gateway to Africa and Europe, offering unique logistical opportunities for trade between continents. With the largest proven oil reserves in Africa (ranking 9th globally with 48 billion barrels), Libya has a strong foundation for attracting foreign investment in energy, renewable resources, and infrastructure reconstruction, which alone is estimated by the World Bank to require over $200 billion.

Despite its challenges, Libya’s economy has shown signs of gradual stabilization, with IMF reports in 2023 and 2024 forecasting GDP growth at around 10%. Investment in Libya’s oil sector alone could exceed $20 billion to increase production to 2 million barrels daily.

Libya remains a promising hub for foreign capital, but unlocking its potential requires bold, methodical strategies and significant reforms, such as:

  1. Providing Investment Guarantees: Leveraging Libya’s international assets (worth over $170 billion) to assure foreign investors, and collaborating with international investment guarantee agencies like MIGA and the African Trade Insurance Agency.
  2. Streamlining Bureaucracy: Reducing inefficiencies in project oversight, which annually waste an estimated $30 billion without adding value.
  3. Fostering Public-Private Partnerships: Encouraging collaboration between Libyan and foreign capital to share investment risks.
  4. Developing an Investment Roadmap: Establishing a clear and prioritized investment strategy with detailed opportunities, legal frameworks, and incentives.

With a forward-thinking vision and collective effort, Libya can attract foreign capital, drive economic diversification, and break free from outdated administrative models, paving the way for comprehensive and sustainable growth.

Read the full article on Benzinga.