In its monthly report, the Central Bank of Libya disclosed that foreign currency revenues transferred to the Central Bank since the beginning of the year until the end of September amounted to 14.4 billion dollars, which includes 2.1 billion dollars in fees. The uses of foreign currency by the end of September 2024 totaled 18.2 billion dollars.
The Central Bank clarified that state uses of foreign currency through the bank amounted to 4.034 million dollars, while commercial banks utilized 14.194 million dollars, bringing the total foreign currency usage to 18.227 million dollars.
The monthly report also revealed a foreign currency deficit of 3.8 billion dollars.
Economic expert, Nour El-Din Al-Hbarat, commented on the Central Bank management’s statement, appointed by the Presidential Council, regarding a foreign currency deficit of $2.7 billion. He noted that this statement only includes the foreign currency amounts that have actually been received or paid, which is accurate from an accounting perspective. However, there is no deficit in the balance of payments in the statement released by Al-Kabeer amounting to $9.1 billion.
Al-Hbarat explained that the first reason is that the value of previous commitments to public entities appeared in the balance of payments at the end of 2023 and thus should not be carried over or re-shown in the 2024 balance of payments. The deficit for that year is deducted from the foreign reserve value. The second reason is that if these commitments have not yet been paid, they should not be included in the balance of payments for the previous or current year under uses.
Al-Hbarat added that while the new Central Bank statement is accurate from an accounting perspective, the economic situation is entirely different. Announcing no deficit in the balance of payments might encourage the government to expand public spending and increase the money supply. This could lead to greater use of foreign currency in a country that relies almost entirely on imports for its goods and services. Such a scenario would likely increase demand for foreign currency, leading to a rise in the dollar exchange rate, higher inflation rates, and liquidity shortages, especially given the volatility of global oil prices, Libya’s sole source of foreign currency.
In a statement to Tabadul, the economist Omar Al-Zarmouh, considered that the decision of raising the fee on selling foreign currency is wrong and unjustified, adding that it is too early to adopt this step.
AL-Zarmouh clarified that this measure will lead to the rise of foreign exchange rates, as economy depends mainly on imports, indicating that merchants will pay a higher price when importing different goods, which leads to the increase of services’ prices in the country.
He also accused the state of intentionally raising prices, unlike other countries in the world, and in contrast with the rational policies that seek to pressure prices as to reduce them.
The expert clarified that it is too early to take this step because Libya still has reserves to use, adding that 163% – what the exchange rate officially costs- is a terrible ratio.
Al-Zarmouh suggested that the best solution is to seek for revenues from the state’s projects.
