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Libya: Criticism against foreign intrusion in monetary fund

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LIBYAPROSPECT – Heba Mahmoud

The Libyan economic conference, which was held in the British capital London about three weeks ago, decided to allocate 8.6 billion Dinar for the Presidential Council (PC) of the Government of National Accord (GNA) as “a loan from the Central Bank of Libya (CBL) during the last quarter of the current year, to cover expenses and salaries of 1.5 million government employees, students loans, embassies salaries, electricity, fuel, and medicine subsidies”.

In a report by Al-Araby Al-Jadid website, translated here by LIBYAPROSPECT, Ahmed Al-Khumaisy, wrote that such decision faced fierce criticism by some Libyan officials against the intervention of foreign governments in discussing the monetary fund and the allocation of resources to the PC.

Per the report, such decision that followed disputes between the PC and the CBL about allocating emergency budget to cover operational expenses, both couldn’t solve the problem unless after meeting at London in the conference called for by foreign states.

The head of the financial committee in the House of Representatives (HoR), Omar Tantoush, said that “no outcomes resulted from London meeting, salaries, student loans, and subsidies expenses are spent as normal, we don’t know the real reasons for asking the West for help.”

He added that “the Presidential Council should have met in the capital Tripoli to discuss the monetary policies, financial expenses and requirement of the current stage.”

Financial conference was held in London, under the name “Libyan Financial Conference” with the participation of the US Foreign Minister, John Kerry, British Foreign Minister, Boris Johnson, the head of the PC, Fayez Al-Sarraj, his deputy, the GNA planning and foreign ministers, the CBL governor some, and of his affiliates and advisors.

The former undersecretary of the Ministry of Economy, Ali Mahjouby, said that “London conference followed quarrel between the Presidential Council and the Central Bank of Libya in an attempt to close the gap”, referring to a legal obstacle as the GNA hasn’t yet acquired a vote of confidence from the HoR, there is no finance minister or economy minister, thus the only available option was foreign intervention.

Libya suffers severe living conditions, cash liquidity crisis across commercial banks, which raised Dollar to 5.27 Dinars in the black market, for the first time in 60 years.

Based on official estimates, the CBL offered financial loans during 2014 and 2015 that worth 41 billion Dinar, due to the decline in oil revenues. The audit bureau said in the annual report that “such funds are not yet settled” and warned of the continuity of the financial deficit and drain of foreign exchange reserves that affect the state basic needs and services.

Libya’s oil production is about a quarter of 2010 levels, 1.6 million barrels a day. Oil ports and fields are in the middle of a power struggle between different factions.

The Libyan economy depends on the oil revenues, which is 95% of the state revenues. The foreign reserves fell from $115 billion in 2012 to $54 billion last year, 2015 witnessed severe deficit in the general budget, in the wake of current political division and decline in oil revenues.