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Libyan Newswire

Governor of Central Bank of Libya reveals host of facts behind country’s financial crisis

Tripoli, 23 April 2017 (Lana) Governor of Central Bank of Libya, Al Sadiq Al-Kabier revealed Sunday a host of facts behind the country's financial crisis and issues facing Libyan people. At press conference, Sunday at the bank in Tripoli, he said oil revenues dwindled from 53 in 2012 to 4.08 billion dollars in 2016 by decrease of 91%, for the Libyan economy is a welfare economy fully based on oil and is negatively and positively effected quickly by oil production and export and its prices. He said the situation reflected on the decreased GNP specially in the last four years (2013, 2014,2015, 2016) due to arbitrary closure of oil production and export, the losses exceeded 160 billion dollars, this reflected negatively on foreign reserves, decreased value of dinar and increased the rate of exchange in the black market. In his press conference, Al Kabier pointed out the increased and illogical public expenditure specially salaries provision where it consumes over 60% of total budget, while, development budget represent 51% of 2010 total budget. He said the absence of ministries and responsible bodies among state public administration since 2010 including ministry of economy assigned to organize foreign and domestic trade, especially in extraordinary conditions, and crisis times, and for customs authority responsible for state security . The governor warned at press conference against chaos in establishing and creating commerce units without control or criteria, leading to hundreds of companies seeking foreign currency and credits. He said one of the main causes of the crisis is major bank customers withdrew their money and saved it outside the banking system, totaling 30 billion dinars exceeding the percentage of 70% of total local production whereas the percentage did not exceed 9% by end of 2010 causing cash crisis which cannot be addressed by printing more cash. He explained that increased public debt and reaching unprecedented rates as it reached by end of first quarter 2017, 66 billion dinars and continued deficit of public budget due to dwindling revenues and increased expenditure, budget deficit is accompanied by unprecedented deficit of Libyan balance of payment. The expansion of black-market of currencies and increased speculations due to decreased revenues of foreign reserve and increased supply of cash outside the banking system, uncontrolled border posts and albescence of legal deterrence negatively affected the strength of the Libyan dinar, he added.

Source: Libya News Agency