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The World Bank: The split in the central banks of Libya has stymied control over monetary and fiscal policy

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In order to get a glimpse into the extent of how the crisis has impaired the financial sector, the World Bank recently completed a review of the Libyan financial sector.

The review demonstrated that even before the civil war, the Libyan financial sector was not sufficiently developed, and the current political crisis has further weakened the state of financial intermediation and inclusion in Libya.

The financial sector report was prepared under very difficult conditions: The mission to Tripoli was postponed twice due to escalating tensions, until the security situation briefly improved and the FCI team was finally allowed to travel to Tripoli. A week-long stay enabled meetings with a diverse group of stakeholders, including the Central Bank of Tripoli (CBL), Libya Credit Information Center, Insurance Supervision Authority, deposit insurance fund, and select banks, leasing and insurance companies. The team later held consultations with the CBL in Tunis and Rome to discuss the report and its recommendations and was able to finalize the study in the summer of 2020.

The report finds that the financial sector in Libya is characterized by several unique features.

First, there are two central banks operating in the country. The CBL (Tripoli) is under the control of the UN-supported GNA government in Tripoli. The rival central bank in Bayda, Eastern Libya, is under the control of the Eastern government. The split in the central banks has stymied control over monetary and fiscal policy and performance of full bank supervision, because both central banks print money and issue currency without coordinating and in the absence of overarching fiscal policy controls. Libyan dinar has dramatically declined in value, which has led to unequal foreign exchange accessibility.

Second, the Central Bank remains the majority shareholder of public banks, which holds 90% of deposits and loans in the system, while being the regulatory agency of the banking sector. This prompts conflicts of interest, including potential forbearance to the benefit of state-owned banks, as well as granting credit to well-connected beneficiaries. While the authorities were considering some reforms in this area, all attempts have been temporarily put on hold in the light of the current crisis.

Third, banks have neither sufficient information nor capacity to make informed credit decisions. The banking sector itself is undercapitalized, and the state-owned banks have particularly questionable asset value.

Finally, initiatives and progress in the financial sector beyond banking have all but frozen. The stock exchange has essentially been on hold with very little public trading. Other forms of finance, such as leasing and insurance, remain embryonic. Given the underdeveloped state of the financial sector, small businesses, individuals, as well as refugees and migrants tend to be underserved.

Libya: New committee to oversee revenue distribution

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Eastern Libyan commander Khalifa Haftar said Friday his forces would let oil production resume after an eight-month blockade and a senior politician in Tripoli said a committee would be formed to ensure fair distribution of revenues.

“It was decided to resume production and export of oil with all the necessary conditions and procedural measures that ensure a fair distribution of its financial revenues,” Haftar said in a televised broadcast.

In Tripoli, the GNA’s  deputy prime minister, Ahmed Maiteeg, issued a statement immediately after Haftar’s speech also saying it “had been decided” to resume oil production and adding this would involve a new committee to oversee revenue distribution.

The committee would coordinate between the two sides to prepare a budget and transfer funds to cover payments and deal with the public debt, he said.

The blockade by eastern forces has cost Libya $9 billion in lost revenue so far this year, the Tripoli-based Central Bank of Libya said this week. The stoppage has become a big obstacle to new efforts to seek a path forwards in peace talks after Haftar’s assault on Tripoli collapsed in June.

Libya’s NOC says lifting force majeure is tied to demilitarising oil facilities

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 The chairman of Libya’s National Oil Corporation (NOC) said on Friday that lifting the force majeure restrictions that have halted oil exports from the war-torn country depends on demilitarising all oil facilities.

In place since the start of the year, force majeure was briefly lifted in July before being reimposed.

Mustafa Sanallah’s comment, published on NOC’s website, comes after Turkey and Russia – the main power brokers in Libya’s war – appeared to moved closer in meetings in Ankara this week to an agreement on a ceasefire and political bargaining process.

“In light of the current chaos and non-organised negotiations, force majeure can’t be lifted,” Sanallah said in a statement.

Ankara and Moscow back opposing sides. Russia supports the eastern-based Libyan National Army (LNA) of Khalifa Haftar, while Turkey backs Libya’s internationall recognised Government of National Accord (GNA).

Sanallah said separate negotiations carried out by NOC in coordination with the head of the presidential council and the international community include an initiative that include safe operation of oil fields and ports, and pushing all “foreign mercenaries” out of them.

The NOC chairman expressed regret over what he called the “politicising of the oil sector” and use of it as a “bargaining chip” to achieve political gains.

NOC supports reconstruction at the University of Benghazi

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The National Oil Corporation (NOC)’s Sustainable Development Department today handed over equipment to the Maintenance and Operations Department at the University of Benghazi.

The equipment included carpentry, electrical, and plumbing tools, electrical generators, surface, and submersible pumps, as well as occupational safety equipment such as shoes, uniforms, and gloves.

This contribution is part of NOC’s ongoing effort to support reconstruction at the University of Benghazi in which it has pledged to help meet the needs of the Maintenance and Operation Department which will play such a vital role in the future maintenance of the university and its facilities.

Libya reports 866 new COVID-19 cases

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Libya’s National Center for Disease Control (NCDC) recorded 886 cases of Coronavirus, 410 recoveries, and 11 deaths.

The number of COVID-19 infections in Libya has risen to 25,822, with 11,509 active cases.

Image may contain: ‎text that says "‎195 الرقم الخاص بالطوارى المرَوْولْكَمضلي LIBYA CONTROL DISEASE CENTRE NATIONAL 3971 التقرير اليومي لفيروس كورونا COVID-19 تاريخ: 16 9/ /0202م عدد العينات الوفيات الحالات المتعافية يوم الأربعاء 11 الموا الحالات السالبة الحالات الموجبة 410 رقم البيان: 193 3,085 886 الإجمالى العام للحالات الوفيات كلنام واحد ضد فيروس ورونا الإصابات التراكمية 409 حالات التعافي الحالات النشطة 25,822 13,908 11,509‎"‎

In the same context, two aircrafts landed at Matiga International Airport in Tripoli on Wednesday, carrying a cargo of medical supplies in the framework of the country’s COVID-19 preparedness and response plans.

The Ministry of Health clarified on Facebook that the shipment arrived from Turkey on board two aircraft, one belonging to the Flying Ambulance Service, and the other by the Libyan Airlines.

The supplies include DNA testing strips and other tools for taking nasal swab samples, according to the Health Ministry.

The Central Bank of Libya records a deficit of more than $2Bn

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The Central Bank of Libya announced, on Tuesday, that the total deficit in the first eight months of this year amounted to 2.837 billion dinars in total revenues.

The bank said, in a statement, that the value of the deficit in foreign exchange revenues of $ 6.3 billion was covered from the central reserves, while the total foreign exchange revenues amounted to $ 3.7 billion, of which $ 2.051 billion came from 2019 exports, indicating that the deficit in oil and sovereign revenues reached 2.837 billion Dinar.

The Central Bank of Libya announced, on August 11, that the deficit in oil revenues from the beginning of this year 2020 to the end of last July amounted to 1.282 billion dinars, and oil and sovereign revenues 2.307 billion dinars.

Before the closure of oil facilities, the total sovereign and oil revenues last year reached 30.622 billion dinars, with a financial surplus of 2.205 billion dinars, without a deficit.

While the Central Bank of Libya recorded total revenues in 2018 of 35.9 billion dinars, foreign exchange sales for all purposes achieved $ 19.1 billion, that is a surplus of $ 5.4 billion.

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BBC produces “The Search for Gaddafi’s Billions” Documentary

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The U.K.’s BBC Four has commissioned a feature-length documentary that will investigate what became of the Libyan dictator Colonel Muammar Gaddafi’s immense wealth in the aftermath of the Arab Spring, which ended his reign.

Produced by Brook Lapping, “The Search for Gaddafi’s Billions” will air as part of the BBC’s long-running documentary banner Storyville, and will follow two Dutch journalists, Misha Wessel and Thomas Blom, as they enter the mysterious world of spies, special forces and political insiders who are hunting Gaddafi’s cash.

 This film follows a deadly trail, covering large parts of the world, to find the missing billions. As the Libyan people, robbed of vast reserves that Gaddafi took for himself, remain impoverished and locked in a power vacuum, two competing groups mount a hunt for the twelve and a half billion dollars, that Gaddafi hid in South Africa.”

Head of Libya’s Tripoli government says he wants to quit

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Libya’s internationally recognised Prime Minister Fayez al-Sarraj said on Wednesday he wants to quit by the end of October, which could feed political tensions in Tripoli amid new efforts to find a political solution to the country’s conflict.

“ I declare my sincere desire to hand over my duties to the next executive authority no later than the end of October,” he said in a televised speech.

Citing the work of U.N.-sponsored talks in Geneva, he pointed to progress in agreeing a way to unify Libya’s fragmented state and prepare for elections.

Audit Bureau reveals violations of the Presidential Council, CBL, other state institutions

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The 2018 report of the Audit Bureau in Tripoli reveals a summons against Mustafa Sanallah for irregularities in the National Oil Corporation (NOC), including the opening of a branch in Houston in violation of the law, but Sanallah refused to submit to investigation.

The report contains observations about the money that the Central Bank of Libya (CBL) and the Presidential Council earn from foreign exchange tax.

The Ministry of Health’s expenditures for the same year amounted to LYD 3.9 billion characterized by lack of staffing, and the loss of 59 cars registered in its name.

According to the report, Siddik al-Kabir monopolizes decision-making at the Central Bank of Libya (CBL), suspends board of directors, and withholds documents from the Audit Bureau

Additionally, forgery, manipulation, embezzlements, and corruption pervade in Libyan banks and there is a complete lack of transparency in all foreign exchange transactions

The report also contains grave violations of several Libyan embassies and consulates abroad run by hanger-on ambassadors close to the Presidential Council and its government, including the embassies of Libya in Egypt, Turkey, Italy, and other embassies of treatment missions in addition to serious administrative and legal violations by officials affiliated with the JCP to which Shakshak belongs.

The 2018 report also contains serious violations of the Presidential Council in terms of increased expenses on travel and other issues, in addition to the Council’s allocation of a special budget for its cabinet and another for the Prime Minister’s cabinet though they do the same work for the same entity. Moreover, the report contains observations about the money that the Central Bank of Libya (CBL) and the Presidential Council earn from foreign exchange tax.

The report highlights the violations of the armed groups affiliated to the Ministry of Interior, the documentary credits file, and other grave breaches and terrifying plunder, in addition to the violations of the Ministry of Defense, whose duties have been assumed by Fayez al-Sarraj since he dismissed al-Mahdi al-Barghathi after the Brak al-Shati massacre in 2017.

Audit Bureau report cites LYD 15bn as operating expenses for electricity company over 10 years. After 2011, maintenance expenditures decreased and salaries rose sharply from LYD 294m to LYD 1 bn/yr despite declining service to the point of being non-existent.

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Embezzlement at the Health Attaché in Germany, including 1.8 million euros disbursed to a person of unknown nationality and unknown connection with the attaché, 680,000 euros withdrawn in the name of a Moroccan driver, and 420,000 euros in the name of a Sudanese employee, all of which deducted from the deposit of the wounded of al-Bunyan al-Marsous and other patients.

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