By Sami Zaptia.
London, 29 February 2016:
The Beida-based Central Bank of Libya (CBL) held a meeting yesterday at the Benghazi Chamber of . . .[restrict]Commerce headquarters in Benghazi to discuss the problem of the lack of cash liquidity at the banks in the eastern region.
The meeting included local business leaders, the Manager of the CBL Liquidity Department, the Manager of the National Commercial Bank and the Manager of the Treasury Department at Wahda Bank.
The meeting discussed in detail the lack of availability of liquidity in the system and its possible negative ramifications on citizens which is compounding their existing economic burdens, including their decreasing purchasing power.
It was agreed at the end of the meeting that local businesses would deposit their cash takings into their bank accounts with the proviso that banks would guarantee the availability of cash when they need it.
The reference here is to the fact that most Libyan businesses are refraining from depositing their cash into their bank accounts inn fear of not being able to withdraw it when they need it.
The CBL, meanwhile, assured the meeting that by next week the problem of the lack of cash liquidity would be resolved and that cash withdrawal ceilings would no longer be imposed. Currently banks are only issuing LD 250-500 per person / month.
The CBL did not give any further details of how the problem would be solved, however, it is thought that it is expecting a new shipment of cash from the CBL inn Tripoli which is reported to have ordered a new print of LD 10 bn.
The move to print new money has met with criticism from some business leaders and analysts as a short term counterproductive inflationary act that would reduce the purchasing power of Libyans even further.
The best measure would be to improve political certainty, stability and security in order to return confidence and increase oil production/exports, which are measures called for by the CBL itself. [/restrict]