By Libya Herald reporter.
Tunis, . . .[restrict]23 June 2014
The Central Bank of Libya (CBL) has today eased restrictions on the opening of documentary Letters of Credit (LCs) for Libyan companies importing manufacturing and industrial raw materials.
It issued instructions to all domestic banks to give priority to this sector in facilitating the opening of LCs.
The implication in the CBL circular to local banks was that the failure to open LCs for this sector would lead to a shortage of their products which would ultimately lead to their import at a higher price.
It will be recalled that Libya is suffering an acute economic and financial crises, in parallel with its political and military crises.
The political and military divisions in Libya have led to a collapse in oil production from a 2012 peak of 1.5 million barrels/day to between 300,000 to 500,000 bpd. This drastic fall in production has been compounded by the collapse on international crude oil prices from over US$ 100 pb to around US$ 60 pb.
These twin factors, amongst others, have led to a run on Libya’s foreign currency reserves which has resulted in the CBL in restricting access to foreign currency.
In May, the Tripoli authorities went as far as imposing an import ban on 32 items through LCs for six months. However, the ban was reversed in June after receiving criticism as inflationary and encouraging blackmarketeering. [/restrict]