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Central Bank of Libya’s Statement

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The Budget and Implementation As of 31/7/2015

Within the framework of transparency, accountability and responsibility, and to bear the burdens of the extraordinary phase Libya is going through, and the ensuing political interaction, the Central Bank was obliged to stay away from them, to represent all the Libyans, protect their valuables, working to limit the draining of their resources, sensing the risks resulting from the significant decrease in oil production, export and prices, seeking with all its might to reduce the corruption infiltrating the state institutions, investing in the positive environment of dialogue among the citizens of the homelands to reach a national consensus formula that protects the country’s unity and rule of law, provides a safe and fair life for all Libyans, contributes to eliminating the negative phenomena of dissent, lack of security and corruption, and a parallel market that burdens the citizens without pity or mercy.

To limit the risks of this phase and in the absence of an accredited budget, the Central Bank of Libya, on the first of March 2015, proposed a 2015 budget, according to the following steps:

  1. Inviting the technical team that actually contributed to the drafting of budgets in former years, whether from the relevant ministries and entities or independent experts from all over Libya, in addition to Bank employees, IMF and World Bank experts. A workshop was held in this regard in the period 2 – 5 March 2015.
  2. Through the discussions, the working team proposed an estimate budget for 2015 that is more realistic, taking into account the significant decrease in the production, export and pricing of oil.
  3. The Central Bank followed it as a guiding budget only, to be used to lead spending and conserve it.

Table outlining the total revenues and spending from 1/1/2015 until 31/7/2015, compared with the 2015 budget, and the actual of 2014 (billion dinars)

Description Actual revenues and spending as of 31/7/2015 Compared with the estimate budget as of 31/7/2015 Compared with the actual as of 31/7/2014
Total revenues 12.4 11.8 12.2
Spending:
First Area (Salaries) 9.7 11 13.4
Second Area (Facilitative) 1.1 4.6 1.9
Third Area (Development) 2 2.9 2.6
Fourth Area (Support) 4.1 4.7 8.5
General Debt 0 0 0.4
Total Spending 16.9 23.2 26.8
Total Deficit 4.5 11.4 14.6

 

  1. Notes:
  2. The revenues listed above include: 7.1 billion dinars oil revenues, 357 million dinars taxes, 22 million dinars customs, 3.1 billion dinars from previous year balances.
  3. The general spending in the fourth chapter included the amount of 3 billion dinars to subsidize fuel
  4. Some salaries were not paid because no national ID number was submitted.
  5. Spending on the four areas covers all of Libya.
  6. There is no information about spending or internal or external commitments by the interim government – Casablanca

 

  1. Conclusions:

From the table above, it can clearly be concluded that the procedures that were taken led to important positive results that can be summarized as follows:

  1. The budget deficit decreased by 69% compared with the same period of 2014, and 60% compared with the estimate budget of 2015
  2. The total spending decreased by 37% compared with the same period of 2014, and 27% compared with the estimate budget of 2015.
  3. The salaries item decreased by 28% compared with the same period of 2014, and 12% compared with the estimate budget of 2015.
  4. Subsidies were decreased by 52% compared with the same period of 2014, and 13% compared with the estimate budget of 2015.
  5. Annex 1 outlines the total revenues and spending from 1/1/2015 until 31/7/2015 compared with the years 2013 and 2014.

In parallel with this, the Central Bank applied a number of controls to limit the exhaustion of state reserves of foreign currency. The table below outlines the uses of foreign currency (one billion dollars):

Description Actual use of foreign currency as of 31/7/2015 Actual use of foreign currency as of 31/7/2014
Covering commercial banks* 7.4 17.4
Central Bank (state institution uses) 3.6 7.4
Total 11 24.8

* All commercial bank claims were covered from all over Libya, with the exception of those that violated valid laws and legislation

It is noted from the table that the controls imposed by the Central Bank, to preserve state needs of foreign currency, led to positive results that can be summarized as follows:

  1. Decrease in the total uses of foreign currency by 56% compared with the same period of 2014
  2. Decrease in the use of commercial banks by 58% compared with the same period of 2014
  3. Decrease in the use of state institutions by 51% compared with the same period of 2014
  4. Annex (2) outlines foreign currency uses as of 31/7/2015 compared with the years 2013 and 2014.

 

In conclusion, the Central Bank will continue to perform its duties, cooperating with all those who seek to fulfill the interests of the homeland and protect its assets, combating corruption and alleviating the suffering of its people. The dangerous local economic conditions, including the reduction in Libyan oil production to 21% of production capacity, and exports to only 15% of the export capacity, in addition to the international circumstances of reduced barrel of oil prices below 40 dollars, the lowest level in 6 years, with the possibility of going down to below 35 dollars in 2015, and in the next five years, may lead to increasing pressures that will weaken the Libyan dinar and exhaust hard currency reserves. This requires that a serious stand is taken to reinstate production and exports without delay or face economic circumstances that are harsher than the current ones.

 

Annex (1)

Description Total revenues and actual spending as of 31/7/2015 Compared with the estimate budget as of 31/7/2015 Compared with the actual on 31/7/2014 Compared with the actual as of 31/7/2013 Estimate budget of 2015 Actual budget of 2014 Actual budget of 2013
Total revenues (billion dinar) 12.4 11.8 12.2 34.5 20.2 20.9 59.1
Spending
First Area (Salaries) 9.7 11 13.4 14.5 18.9 23 24.9
Second Area (Facilitative) 1.1 4.6 1.9 7.4 7.8 3.3 12.7
Third Area

(Development)

2 2.9 2.6 4.5 5 4.5 7.7
Fourth Area (Support) 4.1 4.7 8.5 7.4 8.2 14.5 12.6
General Debt 0 0 0.4 1.5 0 0.7 2.6
Total Spending 16.9 23.2 26.8 35.3 39.9 46 60.5

 

Annex (2)

Description Actual as of 31/7/2015 Actual as of 31/7/2014 Actual as of 31/7/2014 All of 2014 All of 2013
Covering commercial banks 7.4 17.4 20.8 27 35.7
Central Bank (State Institutions) 3.6 7.4 6.5 12 11.2
Total 11 24.8 27.3 39

 

 

 

Issued on Saturday, 29/8/2015