By: Senussi Bsaikri*
The political conflicts have repercussions including economic
ones; they usually are the severest and most dangerous after security impacts. Both sides of the conflict went to use what is available to them to strengthen their positions and search for new loots, amongst these tools was the economy and economic authorities and what follows of policies and decisions.
Today, we are witnessing a result of the effects of the conflict in printing the currency and pumping it in dealings as a way to ease the liquidity problem that appeared strongly lately. Both Libyan central banks in Tripoli and Al-Baida has signed contracts to print amounts of the local currency. The one in Tripoli contracted with a British firm that has been assigned to this job for Libya for decades to print 2 Billion Dinars. While the one in Al-Baida decided to print 4 Billion Dinars with a Russian company, as it sees itself as the legitimate central bank deriving its legitimacy from the House of Representatives (HoR) in Tobruk.
The new crisis exploded with the announcement of the central bank of AL-Baida that 4 Billion Dinars are to be out soon. The internationally supported Presidential Council (PC) objected in the Vienna meeting on the extra money and considered it a forgery. It leaned on the guarantee of the international community of the subordination of the central bank, the National Oil Corporation and the foreign investments authority to the council. Al-Baida bank asserted that it signed the contract as being the legitimate authority according to the HoR.
In a lengthy statement, the chief of Al-Baida bank said that his policy was real and the money to be issued in days to be flawless. He added that the coordination and the consensus were reached amongst chiefs of both banks, while Tripoli bank said that the other bank’s statement is all lies and forgery of truth.
Both monetary powers have shoved politics in their conflict after accusing Al-Baida bank to use twisted ways to provide money for the HoR and the government that should be out of the game after signing the Political Agreement and Vienna meeting.
What distinguished the conflict between the monetary powers and the controversy over-printing currency is the interference of America to support the Presidential Council saying that the currency is a forgery.
In my opinion, the American stance is unjustifiable and is about a sovereignty matter that intrusion about it shall be made by a relevant authority like the International Monetary Fund along with my persuasion that it isn’t relevant to this part and on this level today.
The complexity of consensus reflects the currency crisis; it isn’t on ground. What happened of controversy about printing money says that many things can hinder consensus and make it not possible on the short run.
The most important and dangerous point in this time is the direction of dealing with the crisis, including the economic one in which there is a severe lack of liquidity and concentration is on temporary and secure solutions that are just painkillers.
The 4 Billion Dinars can barely cover payrolls for two months, and its negative effect is that re-pushing them will lead to more inflationary pressures. If concentration doesn’t start soon on effective policies to restore confidence in the banking system so that it can attract the 25 Billion Dinars to the banks, the new currency will join the billions circulating outside banks, and the liquidity crisis may increase and perhaps significantly worsen as reserves of the Central Bank runs out.
For the immediate solution, there is a need for understanding between the central banks of Tripoli and Al-Baida to pass through this tight road. It is possible if they put in mind that Ramadan is nearing, and Libyan suffer the worst amongst lack of money as the banking system is back to what it used to be through a unified management and sole monetary power.
*A Libyan Writer
Translated By LIBYAPROSPECT: Source