By Sami Zaptia.
London, 13 June 2017:
Unity of Libya’s premier financial state institution, the Central Bank of Libya (CBL), appears unlikely in the short term, concludes a UN report on Libya. The report says that unity in the short term does not seem a priority for the Tripoli CBL as it enjoys a stronger position to that of the eastern Beida-based CBL.
Overall, the report says that increased disunity of Libyan state institutions reduces oversight and increases misappropriation.
The assessment was made by the 299-page UN Libya Experts Panel report 2017 released last week.
‘‘The Panel finds that the key financial institutions of Libya remain more divided than ever. With the possible exception of the National Oil Corporation, control over their infrastructure, assets and personnel has further fragmented. This has reduced the possibility for oversight and increased the risk of misappropriation’’.
‘‘The Presidency Council has been divided over the organization of and appointments in key institutions’’.
‘‘As a consequence, the loyalty of some staff is still divided between the competing authorities, which have each tried to make their own appointments. Rival managements and their political backers continue to attempt to strengthen their position through various strategies, including legal action and support from armed groups, often with a destabilizing impact’’.
On the CBL, the report states that ‘‘the division of the Central Bank of Libya has continued since the issuance of the Panel’s previous final report. Two individuals continue to claim the position of Central Bank Governor. The Bank’s duties are exercised mainly from Tripoli, where Sadiq al-Kebir heads the organization. In Bayda’, Ali al-Hibri heads the Bank’s eastern branch while also maintaining a claim to the governorship’’.
‘‘Al-Kebir, who manages the Bank’s accounts and the majority of its staff, de facto controls the financing of the Presidency Council. His support to the Council has been slow and limited, leading to a series of public accusations by Al-Serraj, including a claim that Al-Kebir was a spoiler’’.
The Tripoli CBL Governor Kaber and board member Tarik Yousef al-Magariaf rarely engage with the media or the outside world on the running of the bank, however it was interesting that they both spoke to the authors of the UN report. Their insights of their decisions and relationship with the Serraj Presidency Council / Government of National Accord were instructive.
‘‘Al-Kebir and Central Bank Board member Tarik Yousef al-Magariaf told the Panel that, in their view, the Council itself was responsible for the delays in financing. They stated that they could accept payment orders only from the Ministry of Finance and not directly from Council members. They added that the emergency budget prepared by the Council was of poor quality and lacked the necessary detail’’.
‘‘The Presidency Council and the western Central Bank of Libya have argued over other issues as well, most notably on the devaluation of the Libyan dinar. Whereas the Council has insisted on devaluation, making it a central issue during talks in Rome and London, the western Central Bank has refused’’.
Interestingly, Magariaf confirmed the Tripoli-CBL thinking on dinar devaluation to the report authors. ‘‘Al-Magariaf explained to the Panel that the Central Bank was, in principle, in favour but that the Council needed to have a number of reinforcing policies in place first’’.
‘‘Al-Hibri is considered the Governor of the Central Bank by the Al-Thinni Government and the House of Representatives. Although he has control over neither the Central Bank’s seat in Tripoli nor its income from oil exports, he has a significant impact on public finances, highlighting the division of the institution’’.
‘‘First, following persistent complaints of insufficient cash deliveries from Tripoli, the eastern Central Bank had its own money printed. The notes were printed by a separate company, different from the usual Central Bank provider. Although a clear effort was made to produce nearly identical notes, important differences remain’’.
‘‘Because it was facing its own cash shortage in the capital, the Presidency Council approved its circulation and, thereby, the eastern Central Bank’s initiative. However, the western Central Bank has blocked its distribution in the capital’’.
‘‘Second, eastern administrators claimed to the Panel that a significant percentage of salaries in the east had not been paid by the western Central Bank. They stated that, by the end of 2016, Al-Hibri had disbursed over 3 billion dinars from commercial loans to resolve the problem. These loans increase the State debt and will need to be repaid by a future unified Government’’.
‘‘Attempts to unify the two competing branches made some progress throughout 2016 but ultimately failed. Al-Kebir and Al-Hibri met twice in Tunisia midyear, but a third meeting in Libya was cancelled. A solution in the short term is unlikely’’.
‘‘On the one hand, the eastern Central Bank insists on a number of considerable concessions:
- an agreement on the distribution of cash (both prints);
- an increase in Central Bank approval of letters of credit for the east, which it reports to be currently limited to 17 per cent of the nationwide total;
- the restoration of eastern access to the Central Bank’s information technology system;
- and full Central Bank coverage of certain eastern expenses.
‘‘On the other hand, reunification and compromise do not appear to be a priority at the western Central Bank, which is clearly in a stronger position’’.
