By Sami Zaptia.
London, 18 July 2016:
The Tripoli-based Central Bank of Libya (CBL) has today announced that it has increased the amount of hard currency it is setting aside in its annual budget for the import of five broad categories of goods through Letters of Credit (LCs) from 5 to 10 percent.
In a circular dated 17th July but published today, it updated its previous circular confirming the prioritization of the opening of hard currency LCs for industrial goods, telecoms, aviation, children’s milk and medicines.
The CBL said that it will now also permitted companies importing the above categories of goods to use three different local banks to open their LCs and will allow importing companies to use money from their existing bank balances as part of the 130 percent cover required for opening an LC.
The announcement will come as welcomed news to Libyan consumers and businesses importing goods into the country. The shortage of foreign currency, caused by decreased state revenues and the use of currency purchased on the black market at over three times the official exchange rate to import goods, has sent prices and inflation sky-high.
It will be recalled that Libya is going through a financial and economic crisis with a budget deficit caused by a drastic drop in its oil production to just 27 percent of its 2012 1.5 million barrels per day production peak as well as the fall in international rude oil prices. The country is currently fast depleting its foreign currency reserves believed to have halved from around US$ 100 bn to around US$ 50 bn since the 2011 revolution.