Letter of Credit import ban on 32 items by Tripoli authorities

By Libya Herald reporter.

Tunis, 18 May 2015:

The Tripoli-based authorities have passed a decree banning the import of 32 items through letters of credit (LCs) for 6 months as of 13 May.

The Tripoli authorities through their Ministry of Economy circulated the decree to the Tripoli-based Central Bank of Libya, the Customs Authority, the Chamber of Commerce and the Business Council.

Meanwhile, the Tripoli authorities assured that the ban would not affect the basic necessities and foodstuffs as well as raw materials for local industry and consumption.

The move by the Tripoli authorities to freeze the opening of official documentary letters of credit for imports is seen as a move to stem the haemorrhaging of Libya’s fast depleting foreign currency reserves.

It will be recalled that Libya has been forced into making up its deficits over the last few years by dipping into its foreign currency reserves ironically amassed by the outgoing Qaddafi regime over a few decades.

Moreover, the foreign currency shortage has led to the black market exchange rate for the US dollar to peak at two dinars to the dollar, compared to the official rate of LD 1.30 to the dollar.

Equally, the move to freeze the opening of LCs is also seen as an attempt to control the outward flow of Libya’s hard currencies through either exaggerated or fake invoices and LCs.

It is not clear if this move is a short term move to save hard currency or in view of Libya’s low oil production and the collapse in international crude oil prices or if it will be extended beyond November.

Equally, some businessmen have expressed surprise at the timing of the move coming a month before the fasting month of Ramadan, the peak month for consumption in Libya. There are also concerns on the inflationary effect of the import ban on prices in the Libyan market.

It is also seen as encouraging blackmarketeering and as an abrogation of responsibility by the Tripoli authorities for imports and the economy in its region.

Furthermore, this LC import ban is imposed by the authorities in western Libya but not by the internationally recognized government in eastern Libya.

The Tripoli-based authorities have passed a decree banning the import of the following 32 items through letters of credit (LCs) for 6 months as of 13 May:

1-Cars and vehicles – old or new

2-Motorbikes and bicycles

3-Powered boats

4-Cosmetics

5-Entertainment products

6-Toys, and sports goods

7-Papper tissues, napkins

8-Car accessories

9-Leather products

10 -Hunting guns and fireworks

11-Cement and wooden poles

12-Sanitary (bathroom fixtures) products, marble, tiles and ceramics

13-Wood – raw material

14-Carpets, curtains and accessories

15-Leather and non-leader bags (except school bags)

16 -Reinforcement iron bars

17-Mobile phones and accessories

18-Office and domestic furniture

19-Workshop tools

20-Artificial drinks/juices

21-Chocolates, biscuits (except raw material chocolate for manufacturing)

22 -Artificial fruit drink powders

23 – Canned, preserved, dried vegetables and pickles

24-Crisps and corn flakes

25-Fizzy and mineral water

26 – Chlorine and liquid soaps

27 – Pastas

28-Nuts (edible)

29-olive oil

30 –Harissa (spicy chilli sauce/past)

31-Energy drinks

32 -Caviar and sea foods [/restrict]