Exclusive: Commenting On The Upcoming Parliamentary Session… Al-Barghouthi To Sada: “Taxes And Raising The Exchange Rate Are A Ready-Made Recipe For Draining Citizens’ Pockets”

Economic expert Mohamed Al-Barghouthi told our source exclusively that in the upcoming session of the House of Representatives, with the attendance of the Governor of the Central Bank of Libya, the debate is being framed as if there are only two options: imposing taxes on goods and services, or raising the US dollar exchange rate to around 7.4 dinars. However, according to Al-Barghouthi, the reality is far deeper than a simple accounting trade-off between two policy items; it is a decision that affects the daily lives of Libyans and the future of economic stability.

Al-Barghouthi added that taxes in any economy are a natural tool for financing the state and regulating economic activity, but in the current Libyan context they can easily turn into a direct inflationary burden, given the market’s heavy reliance on imports and weak oversight, as traders often pass any additional costs directly on to consumers. He explained that taxes will not remain mere figures in the Ministry of Finance’s books, but will immediately appear in the prices of bread, medicine, spare parts, and other goods.

He pointed out that the Libyan economy is characterized by limited and largely fixed incomes for most households, and that expanding the tax base without real reform of income systems and social protection would place additional pressure on purchasing power, potentially pushing a broader segment of citizens into monetary poverty.

Regarding raising the exchange rate to 7.4 dinars, Al-Barghouthi stressed that this measure essentially constitutes a significant devaluation of the dinar. While it may appear attractive from a public revenue perspective—boosting the dinar value of oil revenues and improving budget figures on paper—what improves in the treasury may deteriorate in the market. Every imported good and every production input sourced from abroad would be priced at the higher dollar rate, triggering a broad wave of inflation that would affect basic necessities before luxuries.

He added that the risk is not limited to rising prices, but also extends to a loss of confidence in the local currency and an acceleration of dollarization within the economy—a path that is difficult to reverse later. He noted that both options share one common outcome: extracting resources from citizens’ pockets to compensate for structural imbalances that have yet to be addressed, including high public spending, weak domestic production, distortions in the subsidy system, and multiple forms of non-productive expenditure—these being the real roots of the crisis.

Al-Barghouthi emphasized that jumping directly to imposing taxes or devaluing the currency without a comprehensive reform program—one that includes rationalizing spending, improving public administration efficiency, stimulating production, and regulating the market—amounts to treating symptoms while leaving the underlying disease untouched.

He stressed that any tax measure must be selective and well-studied, targeting rent-seeking activities and high profit margins rather than basic goods. Likewise, any adjustment to the exchange rate, if unavoidable, should be gradual and accompanied by policies that protect incomes, support local supply, and prevent price instability. Otherwise, he warned, it may improve a single figure in a financial statement at the cost of social stability.

Al-Barghouthi concluded by emphasizing that what is required of the House of Representatives and the Central Bank of Libya is not a hasty decision to satisfy short-term pressures, but the adoption of a comprehensive vision that reorders Libya’s economic priorities and shifts it from an economy that consumes foreign currency to one that produces real value. Without such a transformation, he warned, the same debate will recur every year, while citizens continue to pay the price each time.