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Exclusive: “Al-Harati” Comments on the Decision to Reduce the Exchange Rate Fee

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Legal advisor Hisham Al-Harati stated exclusively to Sada Economic Newspaper: “The methodology adopted in drafting the decision to reduce the fee imposed on the exchange rate clearly indicates that the dinar’s value will remain stable at this level, likely at least until mid-next year.”

He added, “The decision uses wording that circumvents judicial rulings on the matter and presents it as an independent new decision unrelated to previous ones. Additionally, the change in the fee value is contingent on the Central Bank’s ability to meet its obligations, which requires sufficient time to achieve the necessary balance for the adjustment.”

In a Statement to Sada: Husni Bey Reveals Central Bank Reserves and the Fate of the Dinar

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Libyan businessman Husni Bey stated in an exclusive comment to our source:
“The Central Bank of Libya undoubtedly has the capacity to defend the dinar at any rate it deems appropriate. The bank possesses gold and currency reserves exceeding $90 billion (with gold reserves over $10 billion and dollar reserves amounting to $80 billion). These high reserve levels allow the Central Bank to safely reduce the dollar exchange rate to below 5.000 LYD, thereby strengthening the purchasing power of the Libyan dinar.”

He added: “Let us conduct a simple simulation. It can be said that the official and parallel exchange rates could drop by 250 dirhams for every 5% reduction in the fee. The Central Bank can defend the dinar at around 5.000 LYD/USD, even if this requires using up to $5 billion in reserves annually, with an oil price of $75 per barrel for several years.”

From the consumer’s perspective, Bey explained, a reduction in the exchange rate positively impacts prices and services in the medium and long term. Such a reduction could pressure the prices of durable and consumable goods to decline over time. However, in the short term (3 to 6 months), it may cause some disruptions.

In the short term, Bey highlighted that exchange rate reductions could create distortions in the overall economy, leading to losses for many service providers and suppliers. This may also reduce supply, causing an imbalance between supply and demand, which could temporarily drive prices up instead of down due to traders’ reluctance to lower prices.

However, he emphasized that prices will stabilize and decrease in the medium and long term, likely beyond seven months. Economic balance is always governed by the “supply and demand” equation—if supply decreases, prices will rise even if the exchange rate drops.

Regarding the phased reduction of the fee by 5% or its potential cancellation by the end of the year, Husni Bey noted that this creates uncertainty among traders and speculators. As a result, traders may hesitate to import, and suppliers may cease deliveries, leading to reduced availability of durable and consumable goods. This decline in supply, coupled with steady demand, could drive prices up in the short term, further fueling inflation for 3 to 6 months.

He elaborated: “The mere suggestion of reducing the fee by 5% since mid-October 2023 and talks about canceling it entirely by 15% at the end of December 2023 alarm suppliers, discouraging them from taking risks. This is expected to shrink imports, with losses of around 5% by December 2024 and up to 15% in the first quarter of 2025 for those importing now at a fee-inclusive rate of 15%.”

In conclusion, he stated: “Reducing the exchange rate or the fee remains positive in the medium and long term (beyond seven months), even if it has negative effects in the short term, up to six months. The success or failure of monetary policies ultimately depends on fiscal policies and government spending. The government must avoid ‘expanding public spending,’ ‘financing budgets through deficits,’ and should adhere to the Central Bank’s monetary policies to defend the exchange rate determined by its board of directors.”

He concluded by saying: “My personal opinion is that the ideal rate the Central Bank can defend without depleting reserves is 6.000 LYD/USD. If public revenue is supported through reserves, the Central Bank could defend a rate below 5.000 LYD/USD, provided oil production exceeds 1.3 million barrels per day, gas production surpasses 1.4 billion cubic feet per day, and oil prices remain above $75 per barrel.”

Exclusive: The Central Bank Begins Implementing Parliament’s Decision to Reduce the Foreign Exchange Tax to 15%

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Our source has exclusively obtained a circular from the Central Bank of Libya regarding the Parliament’s decision to reduce the tax by 5%, bringing it down to 15%.

The Central Bank also emphasized the need to streamline procedures for opening letters of credit for all purposes, goods, and services.

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Al-Shhibi: “Clearing Between Central Bank Branches in Tripoli and Benghazi Exceeds the Board’s Authority – Here’s Why”

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Banking expert Dr. Houssem Al-Shhibi commented on his official Facebook page regarding the decision of the Central Bank of Libya’s Board of Directors to activate a unified clearing system between its Tripoli and Benghazi branches.

He stated that this decision, made at the Board’s first meeting, is a positive indicator of the Board’s intent to repair damage caused by political divisions over the past decade. However, he noted several points:

“First: This decision has been repeatedly announced on various occasions, most notably following the formation of the Government of National Unity and a meeting between Mr. Al-Hibri and Mr. Al-Kabeer, but it has not yet been implemented.

Second: Benghazi has two systems within the Central Bank. The first is the original system housed at the branch on Agency Street, separated from the main system by Mr. Al-Kabeer in 2014 for political reasons. While this system can be reactivated, it only reflects the bank’s accounts as they were in 2014.

The second system was created after the division and operates independently of Tripoli’s system, accurately reflecting Benghazi’s Central Bank budget, including bank balances.

Third: Merging the two systems, or in accounting terms, consolidating the two banks’ budgets, faces technical issues due to differences between Benghazi’s and Tripoli’s general ledger and accounting systems.

Additionally: While it may seem like a simple banking measure, achieving clearing unification actually exceeds the Central Bank’s authority. For effective clearing, bank balances must be transferred from Benghazi’s budget to Tripoli’s, which would require shifting corresponding debt items into Tripoli’s budget. The issue is that the banks’ balances at Benghazi’s branch are offset by a public debt exceeding 90 billion dinars. This consolidation requires political willingness from both sides of the political divide to unify and legitimize this debt as a single Libyan public debt.”

He added: “Historically, I was assigned after the Geneva Agreement and the establishment of the Government of National Unity to follow up on this matter, but I found no political will to take this step. I believe this decision goes beyond the capabilities and mandate of the Central Bank’s Board of Directors. I hope the political decision-makers, especially the House of Representatives and the State Council, assume their responsibilities to allow the Board to fulfill its duties and deliver the long-awaited results to citizens.”

Exclusive: Al-Shhumi Comments on Central Bank Board’s Decisions, Says Priorities Should Include Reevaluating the Exchange Rate

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Economic expert Suleiman Al-Shhumi spoke exclusively to Sada Economic newspaper, commenting on the recent decisions made by the Board of the Central Bank of Libya during its first meeting, part of a short-term plan aimed at providing a positive boost to the Libyan community and the financial and economic sectors. However, he expressed concerns that the Board’s decisions might have set expectations too high, suggesting they should have been more precise, especially regarding the opening of interbank clearing between the east and west.

He explained that the decision to open interbank clearing requires more than a decree from the Central Bank; it demands genuine intent, with clear, positive steps announced for opening it. This is particularly important because clearing is linked to settling the accumulated public debt held in the Central Bank’s branch in Benghazi. Such a settlement requires a political decision (a legislative decision by both councils) and the Bank’s actual ability to implement it on the ground by carrying out the settlement and opening clearing comprehensively, rather than through the temporary balance transfers previously attempted.

Al-Shhumi added that, in the past, the Central Bank claimed it had opened clearing, but existing issues created obstacles to a full and comprehensive clearing process. The Bank also made optimistic promises for the future, such as implementing lease financing under the 2010 law, though this law may need significant amendments to enable the proper establishment of lease financing companies, along with time to organize it effectively.

He further noted that opening the currency exchanges requires exchange rate stability and an adequate supply of foreign currency, among other conditions that may not be immediately achievable. On investment and deposit usage, he suggested the Board should prioritize applying the law that reinstated traditional interest, passed in 2023, and questioned why this law has not been implemented.

Al-Shuhumi argued that the Central Bank should focus on its core role in managing the exchange rate. He highlighted that the Bank’s statement did not indicate any plans to reassess the exchange rate, nor did it address the tax on foreign currency sales despite court rulings calling for its repeal. While the recent decisions convey a positive and necessary message, he believes some will be difficult to implement. Moreover, the statement ignored key issues central to the Bank’s role, such as exchange rate management, transparency, and how the Bank intends to address the presence of two governments in the country.

Exclusive: Our Source Confirms Central Bank to Take Urgent Measures for Salary Payments by End of Week

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Our source has confirmed that the Central Bank’s Board of Directors and its Governor will take urgent measures to ensure salary payments are made by the end of the week.

This will be done in coordination with the Ministry of Finance, reassuring Libyans that salaries are a top priority in public spending.

Exclusive: Shipment of 100 Million Dinars in Cash Arrives in Benghazi, Distribution Details Announced

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The Central Bank of Libya exclusively revealed to our source the arrival of a cash shipment worth 100 million dinars to Benghazi. Of this amount, 60 million dinars have been allocated to support branches of Wahda Bank, while 40 million dinars are designated to bolster the vaults of North Africa Bank branches in the eastern region.

This distribution is in line with the Central Bank’s plan and the directives of the Governor and Deputy Governor of the Central Bank of Libya.

Unanimously Chosen: Who Is Naji Issa, the New Governor of the Central Bank of Libya?

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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.

Al-Dharat Warns of the Devastating Impact of the Financial Crisis on Living Costs in Libya

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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.

US Ambassador: Libya Needs Swift Actions to Restore Trust in the Central Bank

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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.

Exclusive: Al-Zantouti: “Oil-for-Food Cannot Be Implemented Due to Name Conflicts Over the Central Bank”

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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: American and British Banks Are Not “Stupid” and Know That the Interim Governor Was Appointed Through Coup and Violence

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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.”

In Details: Dghaim Responds to Al-Kabeer Regarding the Situation Reaching Oil-for-Food if He Does Not Return

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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.”