- Title: In risk to peace plan, rivalries hobble Libya's economy
- Date: 9th September 2021
- Summary: BENGHAZI, LIBYA (SEPTEMBER 1, 2021) (REUTERS) MAN COUNTING DOLLAR BILLS BENGHAZI, LIBYA (AUGUST 31, 2021) (REUTERS) VARIOUS OF PEOPLE AT THE BANK BENGHAZI, LIBYA (SEPTEMBER 1, 2021) (REUTERS) MACHINE COUNTING MONEY BENGHAZI, LIBYA (AUGUST 31, 2021) (REUTERS) VARIOUS OF EMPLOYEES AND CUSTOMERS AT THE BANK BENGHAZI, LIBYA (AUGUST 29, 2021) (REUTERS) CENTRAL BANK GOVERNOR IN BENGHAZI, ALI AL-HIBRI, SITTING BEHIND DESK (SOUNDBITE) (Arabic) BENGHAZI-BASED CENTRAL BANK GOVERNOR OF LIBYA, ALI AL-HIBRI, SAYING: "In fact, after the completion of the international audit review, there is no excuse for anyone, whatever their position is, not to open the clearing." HIBRI WRITING ON A NOTEBOOK (SOUNDBITE) (Arabic) BENGHAZI-BASED CENTRAL BANK GOVERNOR OF LIBYA, ALI AL-HIBRI, SAYING: "Is it conceivable that this budget goes up to 93 (billion Libyan dinars) (around $20.5 billion) and now it goes up to 110 (billion Libyan dinars) (around $24.3 billion) and salaries go up from 28 (billion Libyan dinars) (around $6.2 billion) to 34 (billion Libyan dinars) (around $7.5 billion) and now 43 (billion Libyan dinars) (around $9.5 billion)? According to what I understood from the members of the National Unity Government, they are looking forward to a unified salary scale of 59 (billion dinars) (around $13.5 billion). This is a major crime in the history of Libya." BENGHAZI, LIBYA (AUGUST 31, 2021) (REUTERS) VARIOUS OF PEOPLE AND EMPLOYEES AT BANK BUILDING EXTERIOR WITH SIGN READING (Arabic): "LIBYAN CENTRAL BANK. BENGHAZI" TRIPOLI, LIBYA (SEPTEMBER 7, 2021) (REUTERS) VARIOUS OF CARS AND PEOPLE FILLING FUEL AT GAS STATION EXTERIOR OF CAR SHOP TRIPOLI, LIBYA (RECENT - AUGUST 21, 2021) (REUTERS) (SOUNDBITE) (Arabic) BUSINESSMAN AND HB GROUP OWNER, HUSNY BAY, SAYING: "The problem is not in closing the clearing, because the Central Bank of Libya has the right to close the clearing on a customer, company, individual, branch or bank, like what happened in October 2016 when the clearing of the Bank of Commerce and Development closed. But the entire eastern (banking) sector of Libya, which represents a third of the Libyan people, was completely closed in 2014." TRIPOLI, LIBYA (SEPTEMBER 7, 2021) (REUTERS) CARS AT SHOP TRIPOLI, LIBYA (RECENT - AUGUST 21, 2021) (REUTERS) (SOUNDBITE) (Arabic) BUSINESSMAN AND HB GROUP OWNER, HUSNY BAY, SAYING: "But closing the clearing on all branches, here we are living the result now: Inflation is 40%, the purchasing power of the (Libyan) dinar is reduced by 70%, impoverishment of 80% of the people." TRIPOLI, LIBYA (SEPTEMBER 7, 2021) (REUTERS) VARIOUS OF CERAMIC BLOCS OUTSIDE CERAMICS SHOP SHOP INTERIOR TRIPOLI, LIBYA (AUGUST 29, 2021) (REUTERS) (SOUNDBITE) (Arabic) CEO OF LIBYAN BUSINESSMEN COUNCIL, ALAREF H. ALGAJIJI, SAYING: "It is normal that complications and side effects will occur, because the closing of the clearing has an impact on the movement of instruments between banks, and thus leads to the accumulation of the indebtedness of these banks, affects the movement of trade and citizens too." VARIOUS OF WORKERS AT CAR REPAIR SHOP CAR EXHIBITION ROOM EXTERIOR OF KIA CAR MAINTENANCE SHOP TRIPOLI, LIBYA (SEPTEMBER 2, 2021) (REUTERS) VARIOUS OF PEOPLE AND BIRDS AT MARTYRS SQUARE TRAFFIC AT COASTLINE LIBYAN FLAGS
- Embargoed: 23rd September 2021 18:05
- Keywords: Benghazi Central Bank Economy Finances Libya Money Tripoli
- Location: BENGHAZI AND TRIPOLI, LIBYA
- City: BENGHAZI AND TRIPOLI, LIBYA
- Country: Libya
- Topics: Africa,Economic Events
- Reuters ID: LVA001EU009JP
- Aspect Ratio: 16:9
- Story Text: Libya must reunify its fragmented economy and public finances if it stands any hope of ending a decade of violent division, but moves towards that goal are making slow progress.
Businesses and ordinary people struggle to carry out basic financial transactions, underscoring the continued dysfunction while also showing that peace moves have failed to stop rival factions competing to control economic levers.
Central Bank of Libya (CBL) Governor Sadiq al-Kabir on Thursday (September 9) joined U.N.-backed online talks with the head of its rival eastern-based branch to discuss reunifying the bodies, though any such moves remain at an early stage.
The stumbles, visible in disputes over the budget and the lack of clearing operations between eastern and western banks, reflect political manoeuvring at a moment of potential change.
Libya has been in chaos since the 2011 NATO-backed uprising that ousted Muammar Gaddafi, with control over different parts of the state contested by both political and military means among an array of local forces.
In March an interim unity government was approved by the major eastern and western factions that have been fighting since 2014, with a goal of holding national elections in December - moves that were seen as the best hope for peace in years.
However, that progress is now widely seen as having stalled as powerful figures try to prevent any loss of leverage, or to reposition themselves to benefit from a new dispensation.
During the past seven years, a parallel administration emerged in the east with its own central bank, a rival oil company chief, and other state institutions, claiming legitimacy from the Tobruk-based parliament that was elected in 2014.
That has raised critical questions over accountability for spending by each side and how debt taken by the eastern bank - and used to fund a war against Tripoli and pay salaries of eastern-based forces - would be absorbed into national accounts.
Interim Prime Minister Abdulhamid Dbeibeh had a mandate to prepare for elections, unify the divided state institutions and improve services - but has made scant progress.
Parliament has repeatedly rejected his budget proposals and different parts of the numerous political bodies created during the past years have squabbled over the leadership of major institutions including the oil company and central bank.
Meanwhile, Dbeibeh has continued to spend money, including on salaries, using existing emergency measures.
Reunifying the CBL would be the key goal of any effort to end the economic divisions. The Tripoli-based CBL branch is the one recognised internationally and it cut eastern banks off from most clearing operations in 2014.
Companies in east or west now avoid using banks based on the other side "so that their financial transactions can be done easily," said Alaref Algajiji, chief executive of a Libyan business council.
Last December, as the peace process advanced, the CBL held a full meeting of its governors for the first time in years to agree on a new unified exchange rate that involved devaluing the currency.
That move helped ease a liquidity crisis and was seen as a precursor to reunifying the central banks and restoring clearing operations between Tripoli and eastern commercial banks.
A financial review commissioned from Deloitte as part of the U.N.-backed peace push was completed in July using data supplied by the rival central bank branches, but without conducting an independent audit of either.
It drew up a roadmap towards reunifying them, which the governor of each has said it is following.
The Tripoli-based CBL Governor, Kabir, told Reuters in written answers to questions, that it was "starting to take practical measures" towards the reunification.
He said the CBL was working with the presidency council, the unity government, the U.N.'s Libya mission, and the attorney general's office to agree on a roadmap.
Jalel Harchaoui of the Global Initiative Against Transnational Organised Crime said it was politically better for Kabir to move slowly, and that he may also worry about how eastern forces would use renewed access to national banking.
Eastern CBL Governor Ali al-Hibri said the lack of clearing for eastern banks was "an economic crime," but added that he, too, was preparing for reunification through the process outlined by Deloitte.
However, he challenged figures Kabir had given for public debt levels and accused him of using political arguments to sidestep the reunification process. He also said the unity government's budget proposals were too high and went against agreements reached last year to unify the exchange rate.
"This is a major crime in the history of Libya," he said.
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