Exclusive.. Al-Gmati: The Central Bank Governor’s Resignation Is Not the Core of the Crisis.. Libya Needs a New Economic System

Economics Professor Dr. Helmi Al-Gmati told our source exclusively that Libya’s problem is bigger than the resignation of Central Bank Governor Naji Issa and bigger than replacing one person with another. He explained that the right economic question is not whether Naji Issa failed, but whether he actually had sufficient room to manage an independent monetary policy within a financial, political, and economic system under pressure from all sides.

Al-Gmati explained that monetary policy alone cannot address the public finance deficit, stop the expansion of government spending, reform the subsidy system, prevent fuel smuggling, address weak domestic production, or curb rising demand for dollars, noting that the figures confirm that the problem is structural.

He added that foreign currency uses in Libya reached approximately $31.1 billion in 2025, compared with oil revenues and royalties of around $22.1 billion, creating a gap of approximately $9 billion between what enters the country from its main source of revenue and what leaves in foreign currency.

He pointed out that the most alarming development is that the fuel bill reached its highest level last month, asking: How can an oil-producing and oil-exporting country spend nearly $10 billion importing fuel?

He stressed that this is not merely a Central Bank problem, but rather a problem of a rentier economy, inefficient subsidies, smuggling, weak production and refining capacity, distorted prices and incentives, and the absence of a unified fiscal policy.

At the same time, Al-Qamati stressed that the Central Bank is not exempt from responsibility, explaining that the bank is responsible for managing foreign currency, maintaining exchange-rate stability, managing liquidity and the banking sector, exercising oversight, and protecting the independence of monetary policy.

He said the most serious issue is that if decisions concerning foreign currency, spending, subsidies, and letters of credit come under pressure from interest groups, the problem can no longer be described as the failure of a governor, but rather as the capture of an economic institution.

He added that an institution that is supposed to manage public resources according to efficiency and economic stability gradually becomes a battleground for the distribution of rents. He considered this to be at the heart of Libya’s crisis, where oil generates rents, rents generate interests, interests exert pressure on institutions, and weak institutions reproduce the same cycle.

Al-Gmati stressed that changing the governor alone will not solve the problem. He said that if Naji Issa is replaced by another governor while public spending remains inflated, the economy remains dependent on oil, subsidies remain open-ended, fuel smuggling continues, demand for dollars remains high, fiscal policy remains undisciplined, institutional divisions persist, and interest groups remain capable of influencing economic decision-making, what will happen is simply a change of person without changing the underlying equation.

He noted that the issue today is not solely about Naji Issa, but rather whether Libya wants a truly independent central bank or a central bank constrained by political and fiscal pressures and interest groups.

He pointed out that genuine reform must begin with rebuilding the system through a fiscal rule to control spending, subsidy reform, combating fuel smuggling, restructuring the oil and refining sectors, diversifying the economy, unifying institutions, and achieving full transparency in the use of foreign currency.

He stressed that reserves are not an endless pool of money, but rather the last line of defense for the value of the dinar and economic stability. He warned that continuing to use foreign currency to finance structural imbalances does not resolve the crisis, but merely shifts it into the future and makes its cost greater.

Al-Gmati concluded by stressing that Libya today needs not only a new Central Bank governor, but a new economic system that protects the Central Bank from interference, protects public funds from interest groups, and transforms oil from a source of rent into a source for building an economy.

He added that if the governor’s resignation has indeed taken place, it should not end with merely changing the governor’s name, but should instead mark the beginning of a genuine review of the policies that have brought the Libyan economy to this point.