Husni Bey: “The Parallel Market Cannot Challenge the Strength of the Central Bank Unless Both Governments Expand Spending”
Businessman Husni Bey stated that the Central Bank of Libya has reserves of currency and gold amounting to nearly 90 billion dollars, while the total supply of Libyan money, including banknotes and deposit balances, does not exceed 150 billion dinars, equivalent to 32 billion dollars. This amount of reserves allows the Central Bank to purchase all dinars with less than 30% of its foreign currency and gold reserves, and the Central Bank can dry up the entire supply of dinars whenever it desires.
Husni Bey explained that it is impossible for the parallel market to resist or challenge the strength of the Central Bank unless the government or both governments expand their spending beyond their annual general revenues. After the reforms implemented by the Central Bank over the past two weeks, we cannot accuse it of failure. Conversely, the governments should not expand public spending and must also carry out reforms in subsidies and improve public expenditure management.
Bey emphasized that any collapse of policies will result from government spending expansion exceeding annual general revenue. The primary causes of the dinar’s collapse lie in financing budgets through deficits by creating dinars out of thin air or through the growth of dollar reserves. At the same time, the Central Bank creates dinars from nothing, leading to an increase in the money supply and rising debts of the Central Bank through the monetary base.
