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Dollar crisis imposes pricing over food commodities in Libya

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LIBYAPROSPECT – Aya Khalil

Libya moves to impose pricings of many food commodities as it witnesses spike in prices and shortage in the supply of some commodities. Many traders attributed the spike to the high exchange rate of the American Dollar for the Libyan Dinar, while foreign currencies the government allocates isn’t enough for importing.

The Libyan economist, Ahmed Khomaisi, said in a report on Al-Araby Al-Jadid websiteLIBYAPROSPECT translates here, that the Undersecretary of the Ministry of Economy in the Government of National Rescue in Tripoli, Ali Mahjoubi, uncovered some of the insights of the decision by the government.

Mahjoubi said that the ministry has taken a number of measures in order to impose obligatory prices on some goods including flour that will be sold for 650 Dinars per Ton and every package will be price-tagged.

According to the report, Mahjoubi explained that the 50-kg packages are customized for bakeries and isn’t allowed to be used by merchants. Several areas of Libya have been witnessing a shortage of flour, as its price nearly doubled to 140 Dinars for the 100-kg package. Profit margins on imported products won’t exceed 15%, in accordance with the new decisions.

Libya covers nearly 85% of its needs through imports, official statistics state.

The nearly 6.6 million Libyan citizens consume 1.26 million Tons of grains yearly. Domestic production levels fell to low levels during the past two years, due to lack of security and stability.

The report continued that the ministry of economy banned the import a range of goods, including fireworks, energy drinks and some food commodities, in order not to drain the foreign currency reserves. Foreign reserves fell from $130 billion in 2010 to $75 billion in December 2015.

The sharp decline in cash reserves had heavy pressure on the Dinar, which fell in the black market to 4 Dinars for the Dollar exchange rate, while the official rate is 1.4 Dinars.

According to the report, the Vice Chairman of the Economic and Financial Committee at the General National Congress (GNC), Saieed Abu Rashadh, said that “there is manipulation by traders to have the subsidized Dollar to sell it later in the black market”.

He added that the decline in the production of Libyan oil and the spending the foreign currency reserves are the cause of behind the rise in the Dollar price in the black market, as well as the political divide in the country. Central Bank of Libya (CBL) finally allocated two billion Dollars to finance the importing by the official price of $1.4 Dinars.

It also reduced the annual transform maximum for individuals by 50% to $7500, or the equivalent in foreign currency. The commercial banks have been suffering from scarcity of Dollars for two and a half years.