The World Bank has called for the unification of Libya’s two central banks in an initiative to improve the financial conditions of the war-torn country.
“The split in the central banks has stymied control over monetary and fiscal policy as well as performance,” the World Bank said on Friday in a report reviewing the monetary conditions of Libya.
Th report explained that the political conflict dividing the country has severely damaged the economy and led to destruction of human capital, livelihoods, basic services and infrastructure.
There are two central banks operating in the country. The Central Bank of Libya is under the control of the UN-recognised Government of National Accord in Tripoli, while its rival in Bayda is under the control of the eastern-based Interim Government.
The World Bank added that the split between the two central banks has stymied control over Libya’s monetary and fiscal policy in addition to impeding performance of full bank supervision. The World Bank explained that both central banks print money and issue currency without coordinating and in the absence of any overarching fiscal policy controls. As a result, the Libyan dinar has dramatically declined in value.
The report also noted that the international audit of the central banks is expected to take place in the near future and will be the first step towards the banks’ unification.