Former member of the Board of Directors of the Central Bank of Libya, M. Ghaith, said that demand for the US dollar in Libya is not an official demand that can be precisely measured, but rather a trader-driven demand linked to imports, whose real volume can only be determined two to three months after transactions are executed and import quantities become known.
Ghaith added that if the Central Bank were to inject all its reserves, the dollar would decline, then rise again within a week. He also noted that the presence of approximately three million foreign workers contributes to increasing demand for dollars, as they seek to obtain it at any cost, similar to traders.
He explained that imports should be conducted through banks in an official manner, whether via letters of credit or documentary payments. However, the current reality allows traders to import without proper oversight, with no inquiry into the sources of financing—something he said does not exist in any other country.
He pointed out that the observed decline is not in the official exchange rate, but in the parallel market rate, stressing that the official rate remains fixed, and therefore should not have a major impact as long as imports are conducted formally rather than through the current disorder.
He further noted that the parallel market (black market), as he described it, is indirectly fed by the Central Bank itself, particularly when dollars are provided through cards or cash allocations, as citizens often sell these currencies in the black market instead of using them for daily transactions.
Ghaith questioned whether the Central Bank would continue this policy, given the known capacity of local production, noting that exchange rate determination is not within their mandate.
He concluded that the solution lies in monitoring how dollars are used rather than only how they are distributed, explaining that continued cash dollar injections may help reduce the black market rate and limit smuggling, but will not eliminate the parallel market inside Libya, especially given the lack of clarity regarding how cards and cash are used by citizens.
