Referring to Smuggling and Speculation… Former Finance Minister Bumtari Criticizes Central Bank Measures, Describing Them as an Official Declaration of Surrender to the Black Market System

Former Minister of Finance in the Government of National Accord, Faraj Bumtari, wrote an article titled: A Technical Analysis of the Central Bank’s Revenue and Expenditure Report from January 1 to February 28, 2025.

Although the primary role of the central bank is to protect the monetary and economic stability of the state and prevent it from becoming a tool for financial chaos, the recent report issued by the Central Bank of Libya on revenues and expenditures raises fundamental questions about its policies, particularly concerning foreign exchange management, its stance on the black market, and the potential economic impacts on Libya.

The central bank stated in its report that expenditures were solely for salaries. However, an analysis of the data reveals government spending in foreign currencies on items unrelated to salaries. This raises questions about the source of funding for these transactions, given the lack of transparency regarding how the government covers these expenses.

Regarding salaries, the government has been reclassifying certain salaries from Chapter One to Chapters Three and Four since 2021, concealing their actual value, which exceeds 8.4 billion dinars per month rather than the 5.9 billion dinars reported under Chapter One. This does not include the salaries of the National Oil Corporation, whose real figure remains unknown since being reclassified under Chapter Three. This total surpasses 100 billion dinars annually, approximately 20 billion dollars in salaries alone at the current exchange rate. Considering Libya’s oil revenues for 2024 amounted to 18 billion dollars, according to the Central Bank of Libya’s reports, they would not even be sufficient to cover salaries, let alone other essential expenditures and subsidies.

These figures reflect the continued inflation of Chapter One, which stood at 1.8 billion dinars per month until March 2021, marking an increase of 6.6 billion dinars per month in less than four years. This is a worrying indicator historically linked to corruption cases.

The central bank’s data also reveal that the largest share of foreign exchange was allocated for personal use, totaling approximately 3 billion dollars distributed across 750,000 cards, equivalent to around 17 billion dinars—an amount that could cover two full months of state salaries. Notably, January salaries had only been disbursed when these cards were funded. These figures contradict the prevailing economic stagnation and lack of developmental spending, raising concerns about cash flows and the potential exploitation of these operations for money laundering and currency speculation.

When letters of credit for importing goods and services amount to 2.3 billion dollars, compared to 3 billion dollars for personal purposes, it highlights the severe distortions in monetary policies. These ratios reflect a critical economic crisis that directly affects citizens, accelerating the depletion of foreign currency reserves and potentially forcing the country into external borrowing. This, in turn, leads to declining purchasing power and rising prices in an already unstable economy.

Some key figures were absent from the report, particularly regarding fuel subsidies, as these are deducted directly by the National Oil Corporation. The only clearly stated figure is 8.7 billion dollars allocated for fuel for the General Electricity Company, marking an 87 percent increase in 2023, according to the UN Panel of Experts’ report issued on December 6, 2024. Consequently, the total required to fund salaries and electricity plants alone reached 28.7 billion dollars.

Amid these alarming figures, rather than taking strict measures to curb speculation on the dollar, the central bank made a surprising decision to expand the network of exchange offices by granting official licenses to 135 companies and bureaus. This decision cannot be separated from the continuous increase in foreign currency spending, as it has become evident that a significant portion of cash flows bypasses the formal banking system and is instead directed through the so-called “legalized” parallel market, further complicating the economic crisis.

This move was not a monetary reform, as some may claim, but rather an official declaration of the central bank’s surrender to the black market system, effectively legalizing and providing it with a regulatory cover.

The continuation of such monetary policies threatens to further depreciate the Libyan dinar, deplete foreign currency reserves, increase inflation, and raise the cost of living, while also exacerbating corruption within the public sector. The real question, therefore, is not just about Libya’s economic future but about the state’s ability to reclaim control over its financial system.

Addressing this crisis cannot be achieved by expanding the black market or legitimizing financial chaos. Instead, bold decisions are needed to reform the banking system, restructure economic priorities, control public spending, and impose strict oversight on suspicious transactions. Will the central bank fulfill its true role in protecting Libya’s economy, or will it merely become an official tool serving the interests of a privileged few at the expense of the people?

The questions remain open, and the answers will determine the fate of Libya’s economy in the coming years.