Professor of Economics at the Libyan Academy, Dr. Omar Othman Zarmouh, told our source that the Central Bank of Libya’s statement clearly indicates that the amount of foreign currency received from the National Oil Corporation is significantly lower than the demand, resulting in a foreign exchange deficit.
He continued: “The statement suggests that, to stabilize the exchange rate, the Central Bank is willing to cover the deficit by withdrawing from its reserves.”
He added: “My comment on this is that while this approach is sound and appropriate in the short term—since reserves exist for this purpose—the Central Bank’s role in ensuring monetary stability should involve adding to foreign exchange reserves during surplus periods and withdrawing from them during deficits.”
He emphasized: “In the long term, however, the concern is that a persistent deficit could become chronic, making the devaluation of the dinar inevitable.”
To avoid the need for devaluation, the following policies must be adopted:
- Increase oil production and exports.
- Require the National Oil Corporation to transfer oil revenues immediately to the treasury account at the Central Bank of Libya without any delays.
- Prohibit the National Oil Corporation from importing fuel through barter agreements, as these are inefficient, prone to corruption, and violate the state’s financial system law.
- Adopt a unified state budget that aligns with Libya’s economic capacity to prevent inflation, ensuring it is categorized by sectors, municipalities, and institutions, regardless of political and institutional divisions.
- Ensure that funding sources, expenditures, and their objectives—including development spending—are clearly defined and subject to oversight by the Audit Bureau, the Administrative Control Authority, and the Anti-Corruption Commission. Additionally, official institutions should issue quarterly reports to track revenues and expenditures.
