Ayoub Al-Farsi, a member of the Monetary Policy Committee at the Central Bank of Libya, told our source exclusively that the Finance Minister\u2019s decision to raise the customs dollar rate to 6 dinars, up from around 2.25 dinars, highlights a fundamental contradiction in the management of Libya\u2019s economic and fiscal policies.<\/p>\n\n\n\n
According to Al-Farsi, Ministry of Finance Resolution No. 160 of 2026, which abolishes the estimated customs dollar rate (previously ranging between 2.01 and 2.5 dinars) and adopts the official exchange rate applied by the Central Bank of Libya (currently around 6.40 dinars after taxes or exchange-rate adjustments), represents a major supply-side shock to the domestic economy<\/strong>.<\/p>\n\n\n\n He added that, in the absence of effective price controls and oversight of documentary credit implementation mechanisms, the measure shifts from being a tool for enhancing public revenues into a \u201cwrecking ball\u201d for citizens\u2019 purchasing power.<\/p>\n\n\n\n Al-Farsi explained that the sudden increase in the customs valuation base by more than 218% effectively triples customs duties and related taxes.<\/p>\n\n\n\n Given the lack of market oversight and control over traders\u2019 profit margins, importers are unlikely to absorb these higher costs. Instead, they are expected to pass them on entirely\u2014often with an additional precautionary markup\u2014to consumers.<\/p>\n\n\n\n The inflationary effect is compounded because importers are already facing higher international shipping costs and foreign-currency procurement expenses, to which the customs-duty shock is now added.<\/p>\n\n\n\n Al-Farsi noted that one of the stated goals of customs-related reforms is to combat fraudulent documentary credits and reduce opportunities for excessive profits. However, without coordination with monetary policy, the results may be counterproductive.<\/p>\n\n\n\n The sharp rise in customs charges at official ports creates a strong incentive for importers to seek unofficial channels through smuggling or to manipulate invoices by understating the value of imported goods (under-invoicing) to reduce customs obligations.<\/p>\n\n\n\n Importers who previously required a certain amount of dinar liquidity to pay customs fees upon the arrival of goods now need substantially more cash to clear shipments. This deepens liquidity pressures in the commercial sector and further raises the overall cost of goods.<\/p>\n\n\n\n Al-Farsi argued that the current situation reflects a clear contradiction in Libya\u2019s policy mix:<\/p>\n\n\n\n He compared the situation to monetary policy pressing the brakes to calm markets while fiscal policy presses the accelerator, fueling inflation. The result, he said, is the cancellation of any positive effects, with citizens\u2019 purchasing power becoming the primary casualty.<\/p>\n\n\n\n With government salaries and real household incomes largely unchanged, Al-Farsi warned that the sharp rise in prices\u2014especially for goods that make up daily consumption and are more than 90% imported\u2014will significantly reduce effective demand.<\/p>\n\n\n\n This could push markets into a state of stagflation<\/strong>, characterized by economic stagnation combined with rising prices.<\/p>\n\n\n\n Al-Farsi concluded that any fiscal reform focused solely on revenue collection and accounting adjustments, without strict oversight of documentary credits and without administrative and geographical unification of border crossings, remains incomplete.<\/p>\n\n\n\n He stressed that, in economic theory, customs duties are intended to protect domestic production and regulate trade\u2014not merely to generate revenue to finance excessive consumption-oriented public spending.<\/p>\n","protected":false},"excerpt":{"rendered":" Ayoub Al-Farsi, a member of the Monetary Policy Committee at the Central Bank of Libya, told our source exclusively that the Finance Minister\u2019s decision to raise the customs dollar rate to 6 dinars, up from around 2.25 dinars, highlights a fundamental contradiction in the management of Libya\u2019s economic and fiscal policies. According to Al-Farsi, Ministry […]<\/p>\n","protected":false},"author":13,"featured_media":257334,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[744,613],"class_list":["post-257333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-finance","tag-libya"],"acf":[],"_links":{"self":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/257333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/comments?post=257333"}],"version-history":[{"count":1,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/257333\/revisions"}],"predecessor-version":[{"id":257335,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/257333\/revisions\/257335"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media\/257334"}],"wp:attachment":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media?parent=257333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/categories?post=257333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/tags?post=257333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Imported Inflation and Rising Prices<\/h3>\n\n\n\n
Greater Distortions in the Documentary Credit System<\/h3>\n\n\n\n
Increased Smuggling and Tax Evasion<\/h4>\n\n\n\n
Higher Financing Costs<\/h4>\n\n\n\n
Lack of Coordination Between Fiscal and Monetary Policies<\/h3>\n\n\n\n
\n
Risk of Deepening Stagflation<\/h3>\n\n\n\n
Conclusion<\/h3>\n\n\n\n