In a significant decision, Naji Issa has been unanimously appointed as the new governor of the Central Bank of Libya. This video delves into Issa’s background, highlighting his career and the expertise that led to his selection for one of Libya’s most critical financial roles. Watch to learn about the man tasked with steering the country’s economy through a pivotal time of transition and reform.
Mohamed Al-Dharat, the head of the Libyan Foreign Bank, warned of the devastating impact of the financial crisis on living costs in Libya.
Al-Dharat stated on the sidelines of a roundtable on energy and infrastructure between Libya and Italy, organized by Energy Capital & Power in Rome, that consumer goods prices have risen significantly, with increases of up to 300% for some products.
This increase points to the substantial rise in costs in the parallel market, where the Libyan currency has lost much of its value.
Al-Dharat emphasized the severe impact of the crisis on business activities in the country.
He explained that traders and economic actors are facing difficulties; they are either unable to conduct business or unable to operate efficiently. The uncertainty regarding the management of the Central Bank of Libya and the lack of trust in financial transactions have paralyzed the economic system.
He confirmed that every day that passes without a solution exacerbates the situation, making it increasingly difficult to resolve the problem.
Al-Dharat noted that the prolonged financial crisis is pushing the country toward economic collapse and warned that each day of this crisis is equivalent to months of efforts to resolve the issues and clean up the resulting chaos.
He concluded by stating, “Something must change as soon as possible, or the situation will become unsustainable,” expressing hope for a solution before the situation deteriorates further.
The US Ambassador to Libya, Richard Norland, stated in an interview with Egyptian television on Sunday that the recent action taken by the Libyan Presidential Council is a unilateral move and a risky step that has raised questions regarding the Central Bank of Libya following the dismissal of its governor, Seddiq Al-Kabeer.
Norland noted that concerns have been raised about the Central Bank and the recent intelligence raids that resulted in the seizure of documents and files, which have heightened fears regarding the fight against money laundering and terrorist financing.
According to Norland, the United States believes that Libya urgently needs swift actions to restore confidence in the Central Bank, allowing for normal financial transactions to resume. He expressed concern that efforts to resolve the Central Bank crisis could lead to a vicious cycle.
He added that Libya needs a unified decision regarding a credible leadership for the Central Bank that enjoys consensus among all parties.
Financial expert Khaled Al-Zantouti stated in an interview with Sada Economic Newspaper regarding the possibility of the Libyan economy reaching an oil-for-food scenario if Al-Kabeer does not return: “Based on experience, I do not want to mention specific names, but generally, I do not believe it is easy to put Libya under the oil-for-food principle in exchange for a UN decision. Under the current global conditions, the world does not care about individuals and names but rather about its own interests, particularly the interests of the permanent member states. These countries do not care if Libyan funds are stolen or if Libyans suffer or live. Conflicts, wars, divisions, liquidity issues, long queues, questionable credits, unregulated spending, and currency devaluation have been visible to the world for years. The world has never acted to protect those funds or alleviate Libyan suffering. What matters to the world is that oil is sold, based on the interests of its companies only, and it does not matter even if oil stops completely, as the amount of Libyan oil produced is limited and has no significant impact on the global market, with its share not exceeding 1%, which can be compensated by other countries.”
He also said: “Frankly, I wished such a step had been taken a long time ago, at least to prevent this bloody, selfish conflict that we have suffered from over the past years, which revolves around money and power. However, now it is not easy at all to make such a decision under the current global circumstances. Even the previous decision to freeze foreign assets was made at the request of Libyan agencies and under global conditions different from the current situation. We are now suffering from the erosion of those frozen assets and our substantial losses day by day, with no permission even to manage them through banks, which we have requested for years.”
Al-Zantouti continued: “Finally, I say that the decision to implement oil-for-food cannot be made due to conflicts over the Central Bank and under the current global conditions. The only exception might be a complete agreement among legislative authorities to ask the UN to take such a step, which I believe is impossible.”
He added: “It is more appropriate for Libyans to agree on the necessity and importance of the Central Bank’s independence and to manage it with a specialized and completely independent board of directors, free from any ideological, regional, or personal interests, to perform its true functions in shaping and implementing monetary policies in full harmony with other financial and commercial policies and in accordance with international standards. This is what I hope for.”
He concluded: “The Central Bank remains the treasury of Muslims in Libya, and we must adhere to the commands of the Almighty in preserving and investing it for the benefit of this suffering people.”
Radio France reported today, Wednesday, that American, British, and European banks remain hesitant to deal with the Central Bank of Libya. These banks are not “stupid”; they are well aware that the interim governor was appointed unilaterally through a coup and violence.
Jalel Al-Harchaoui, a researcher at the Royal United Services Institute in London specializing in Libyan affairs, stated that what Dbeibeh presents as the interim governor of the Central Bank is not truly the case. The interim governor has control over the Libyan dinar systems but lacks access to the more critical assets, namely dollars, which belong to the Libyan people.
He continued: “Instruments like letters of credit, such as Libyan reserves abroad, are financial tools that this new governor cannot use. There are concerns about a very short-term shortage, and no one can predict how Libya will import essential goods in October.”
Paris-based international law attorney Majed Boudin stated that imports into Libya are completely banned, leading to a market shortage unless the international community acts quickly to resolve the issue.
He emphasized the importance of reorganizing resources from oil fields, which pass through the National Oil Corporation and are then deposited into the Central Bank to fund the economy and pay salaries.
According to Boudin, this destabilization benefits certain countries, such as Russia, which is a major beneficiary of smuggled Libyan oil, as well as China and Iran, which present themselves as alternatives in the parallel market in case of shortages.
The attorney added: “Consumer products will be replaced through these unexpected gains from oil smuggling with other products. For example, we could replace suppliers of this or that product from Europe with Russian, Chinese, or even Turkish suppliers. This is a geopolitical issue that needs to be resolved, especially since oil production, Libya’s primary source of income, is halted.”
Advisor to the Presidential Council, Ziad Dghaim, exclusively responded to Sada Economic Newspaper about Al-Kabeer’s comments concerning the economic situation reaching an oil-for-food scenario if he does not return.
He said: “Oil-for-food is an Arab media term for a system that requires approval from the Security Council, similar to Iraq after the Gulf War, or voluntary approval from state institutions, which is impossible with Dr. Mohammed Al-Menfi as President.”
He continued: “Unfortunately, this plan has been proposed since the oil shutdown in 2020, which we rejected at that time. It keeps being proposed, and despite many Libyan institutional leaders’ approval due to ignorance and ease of solutions, we will continue to oppose it.”
He confirmed: “There is no doubt that the plan serves the interests of regional and colonial powers, but we bet on the wisdom and patriotism of the military leadership and reconstruction in Barqa and Fezzan to thwart the agents once again.”
He added: “I doubt that American financial institutions would risk their reputation and the future of global dollar reserves and deposits for one person, especially with China now seeking a strategic partnership with Tripoli.”
He said: “Seddiq Al-Kabeer should ask the councils to cancel the election and appointment of Mr. Al-Shukri according to Article 15, not the Presidential Council, which applies the law and the political agreement literally. Al-Shukri was elected by the parliament in a fair election, and in another session, with a two-thirds majority, he can be dismissed and Al-Kabeer can be re-elected. The State Council can also cancel its endorsement of Al-Shukri, which was sent to the Presidential Council on 4.8.2024.”
He concluded: “Regarding judicial rulings, decisions by the state presidency during emergency situations are not binding according to the law as they are acts of sovereignty. I am surprised now by the talk about respecting judicial rulings from those who have never respected them.”
Jalel Al-Harchaoui, an expert on Libyan affairs at the Royal United Services Institute, said in a post on the “X” platform that the ongoing economic crisis in Libya may remain unresolved due to the stubborn confrontation between the two main factions.
Al-Harchaoui pointed out that each faction expects the other to back down first, and deep down, neither cares about the damage, prioritizing their power struggle over the well-being of the people, according to his statement.
Professor of Economics at the Libyan Academy, Dr. Omar Zermouh, commented to Sada Economic News regarding the Central Bank of Libya’s August 2024 report on public debt. He was asked, “What is the value of public debt, and is it truly zero within less than a month? Has the Central Bank forgiven the accumulated debts of the government?” He responded:
He added: “The second point is that the authority to extinguish public debt does not belong to the governor or the board of directors. Their role is to manage the Central Bank’s funds, not to decide how to use or forgive them without considering the actual owner of these funds, which is the people represented by the legislative authority. Although there is an issue with the legitimacy of the current House of Representatives, addressing this may require consultation between the House of Representatives, the State Council, and the Presidential Council. The point is to highlight that extinguishing public debt is not within the purview of the Central Bank’s Board of Directors. The creation of public debt should be based on budget laws or similar financial arrangements, and extinguishing it should follow the same procedure. The existence of public debt implies that the debtor is the public treasury and the creditor is the Central Bank, with ownership rights held by the people through their legislative authority. Therefore, the repayment of public debt should be decided by the legislative authority, which owns the capital, reserves, and profits, and not by any institution acting without explicit authorization from the owner.”
Zermouh continued: “If we examine the phrasing in the Central Bank’s August report about public debt, we may conclude that the wording does not truly reflect the extinguishment of public debt. The process of extinguishing public debt should follow these steps: (a) Issuing a law by the legislative authority for partial or complete extinguishment of debt, as in Law No. 15 of 1986, specifying the funding source. (b) The Central Bank should implement the debt law and make the necessary accounting entries, preparing and approving journal entries with the required documentation. (c) Recording these entries in the Central Bank’s ledgers, either manually or electronically, to achieve the complete or partial extinguishment of debt according to the law. Based on this, the statement that “it has been extinguished and is now zero, and the necessary accounting entries are being made” implies that the Central Bank has not yet made the accounting entries. If the Central Bank prepares a balance sheet at the end of August, the public debt will still appear unchanged, and there is no law to support this action.”
Zermouh further noted: “The third point is whether it is possible to extinguish public debt if the Board of Directors approaches the legislative authority with a proposal to extinguish it, specifying the value and source of funding. After the exchange rate change on December 16, 2020, the Central Bank had to re-evaluate its assets and liabilities, resulting in a significant “revaluation difference” due to the 70% devaluation of the dinar. This difference appears on the liabilities side of the Central Bank’s balance sheet and is considered part of the ownership rights held by the people through their legislative authority. This difference might be sufficient to extinguish the public debt recorded in the Central Bank’s books, whether 84 or 145 billion dinars as previously estimated. Therefore, it is possible to extinguish public debt and reduce it to zero, but the process still lacks a legislative aspect. Improvisation in such matters could have severe consequences, as the revaluation difference is important for strengthening the Central Bank’s financial position and might be needed in the future to enhance the dinar’s value after the decline resulting from the December 16, 2020 decision.”
He also pointed out that the public debt could potentially be extinguished within a month if the necessary law is issued, allowing for the immediate execution and completion of accounting entries.
In conclusion, he said: “The final question is whether the Central Bank’s statement about extinguishing public debt means that the Central Bank has forgiven the accumulated debts of the government. The answer is that the Central Bank’s Board of Directors does not have this authority; the legislative authority does. Ideally, the legislative authority approves the budget, authorizes the government to spend within a specified limit for a fiscal year, and authorizes borrowing from the Central Bank or others as needed. Thus, the legislative authority decides on the repayment of public debt from state revenues or from the revaluation difference resulting from the devaluation of the dinar, with the mentioned reservation. Therefore, extinguishing public debt is not a gift or free concession to the government; it is a decision of the legislative authority that initially created the debt. This is the ideal scenario, but realistically, the House of Representatives (and the State Council) have been neglecting budget matters and oversight since 2015. Such recent moves by the Presidential Council, despite the legal complexities, may have stirred things up and awakened the need for a unified budget with clear objectives and effective economic policies, implemented according to the financial system law and its executive regulations.”
The American news agency Bloomberg reported today, Tuesday, that Libyan oil production continues to decline as authorities in eastern Libya impose the closure of oil fields, exacerbating the crisis that the United Nations has warned could lead to economic collapse.
Bloomberg noted that production at the El Feel oil field in southwestern Libya has stopped, according to individuals familiar with the matter.
Sources told Bloomberg that oil pumping will be gradually halted across the country.
The United Nations Support Mission in Libya (UNSMIL) has presented a roadmap proposal to resolve the crisis surrounding the Central Bank of Libya, which has been received by both the House of Representatives and the High Council of State.
UNSMIL also stated that in light of the recent unilateral actions taken by Libyan parties, it is unclear who is currently responsible for the Central Bank.
Libya is facing an imminent financial deterioration and a potential crisis due to the lack of clarity regarding the leadership of the Central Bank.
To avoid such a crisis, it is essential for Libyan parties to reach a swift consensus to clarify the leadership of the Central Bank and restore confidence in its operations. Therefore, UNSMIL recommends the following steps and is ready to facilitate discussions and seek technical assistance for their implementation:
The Director of the Office of Presidential Affairs in the House of Representatives has sent a formal letter to the Governor of the Central Bank of Libya.
The letter reads as follows:
Respected Sir,
Governor of the Central Bank of Libya,
Greetings,
Upon reviewing the correspondence dated June 20, 2024, with reference number (81/1199), which includes the receipt of communication from your esteemed bank’s postal department, along with decisions numbered (21-22-2024) concerning the appointment of a new governor and board of directors for the Central Bank, as well as the formation of a handover committee, His Excellency has instructed me to convey the following:
The decisions issued by the Presidential Council are deemed null and void. This stance is particularly significant following the House of Representatives’ confirmation of the continuation of the current governor and his deputy in their positions.
Please accept our highest regards and respect.
This communication underscores the House of Representatives’ position on the recent decisions by the Presidential Council regarding the Central Bank of Libya.
The House of Representatives has issued Decision No. (7) of 2024, which addresses the governance of the Central Bank of Libya. This decision annuls Decision No. (3) of 2018 regarding the appointment of the Governor and establishes the current governance framework for the Central Bank. The decision follows an extensive review of relevant legal and regulatory documents, including:
The decision outlines the following provisions:
Article 1:
Decision No. (3) of 2018, which appointed Mr. Mohammed Abdel Salam Al-Shukri as Governor of the Central Bank of Libya, is hereby revoked.
Article 2:
The Board of Directors of the Central Bank of Libya will continue under the chairmanship of the current Governor, Mr. Saddek Elkaber, until a new appointment is made.
Article 3:
The members of the Board of Directors are to assume their roles within a few days from the date of this decision’s issuance. This decision will be published in the official gazette.
Article 4:
This decision takes effect immediately upon issuance and will be published in the official gazette.
The House of Representatives has issued this decision to maintain governance and stability within the Central Bank of Libya.
أصدر
The Committee on Planning, Finance, and the General Budget of the House of Representatives has reviewed the decision of the President of the Council No. (22) of 2024, regarding the reformation of the Board of Directors of the Central Bank of Libya.
Within this framework, the Committee considers this decision null, given its violation of all legal means supporting it, including the Constitutional Declaration, its amendments, and the political agreement, reaching the provisions of Law No. (1) of 2005, its amendments, and especially the clauses concerning the authority of the legislative body. These clauses emphasize that the original authority for appointing the Board of Directors of the Central Bank of Libya is vested in the House of Representatives, without mentioning any delegation of this authority to any other body.
Consequently, what was issued by the Presidential Council is both void and illegitimate. In addition to being an infringement on the powers and competencies of the legislative authority, it undermines the stability and cohesiveness of the country’s institutions.
The Committee on Planning, Finance, and the General Budget of the House of Representatives strongly denounces and condemns this action, considering it legally invalid and devoid of any political legitimacy from the Presidential Council. It is an act that leads to the disintegration of institutions and one of the most important pillars of the state. Therefore, the Committee calls on the Central Bank of Libya to take a clear stance and avoid these unconstitutional actions by adhering to its original legal framework, which was approved by Law No. (6) of 2004.
The Committee also calls on all executive institutions to refrain from complying with such unlawful measures, ensuring the safety of the law and the safety of the institutions. They are warned of the consequences of acting against this, as it constitutes a severe violation.
