By Sami Zaptia.
London, 7 March 2016:
The Central Bank of Libya (CBL) has insisted that it has resumed the opening of Documentary . . .[restrict]Letters of Credit (LCs) for Libyan businesses since January. The CBL statement was released yesterday.
The CBL has called on all those seeking LCs to direct their requests to their bank branches across the country to complete the necessary procedures.
The statement by the CBL comes on the back of businesses in Libya complaining that the CBL is not opening LCs for them at the official exchange rate, forcing them to buy FX on the black market at nearly three times the official rate. Importing goods using black market FX rates has been inflationary and has led to retail prices to shoot up.
The CBL is trying to deflect criticism that its stringent conditions for opening LCs has contributed to price rises and inflation in the country.
It will be recalled that the CBL had introduced a raft of new conditions for the opening of LCs in January in response to both corruption and Libya’s shortage of hard currency due to the country’s political divisions, the fall in oil production and the rash in international crude oil prices.
However, the CBL’s stringent new conditions for opening LCs are seen by some business leaders as onerous and even beyond achievement. Critics say that the conditions place demands on other state institutions in a country where the state is weak and minimal.
Some of the CBL conditions make demands on foreign importers and require information that might not be obtainable in exporting countries such as money laundering and corruption checks on directors/owners of foreign companies that may not be implementable in those countries. [/restrict]