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By Sami Zaptia.
London, 18 August 2020:
In another attack on the Tripoli Central Bank of Libya (CBL), the head of the General Union of Libyan Chambers of Commerce, Mohamed Raied (Misratan member of parliament and owner of the Nasseem dairy factory), yesterday blamed the Tripoli CBL for millions worth of goods stranded at Libya’s ports unable to be released due to CBL policy intransigence.
The Tripoli CBL has come in for continuous criticism for its inflexible monetary policy from business leaders, the Audit Bureau and the internationally recognized Libyan government based in Tripoli.
Speaking on Libyan TV on Sunday, the Tripoli based Libyan Finance and Acting Economy Minister, Faraj Bumtari, said the Tripoli Central Bank of Libya was using monetary policy instruments incorrectly through poorly managed documentary credits. This, he had added, has contributed to major traders acquiring foreign currency and selling it on the black-market. This will affect the country’s economy (negatively) in the long run.
Like the General Union of Chambers’ head Raeid, the Minister was commenting on the fact that Libya’s Customs Authority were prohibiting goods entering Libya that were not paid for through official Letters of Credit. This blockade, the Minister said, was nevertheless a legal move in accordance with existing law – insisted on by the Tripoli Central Bank of Libya (CBL).
He added that his internationally recognized government, led by Faiez Serraj and based in Tripoli, had on more than one occasion decreed to allow stranded goods to enter the country in violation of this, despite the refusal of the CBL to acquiesce to this and allow direct transfers.
Speaking to Libyan media on the same issue, Raied said the holding up of goods in Libya’s ports is a gross mistake that does not serve the interests of the state or the Libyan citizen. He said that the blockade of these goods causes significant losses to the Libyan economy and a waste of funds in the form of hard currency through delay fines to importers for ships and containers.
Attacking current Tripoli CBL policy, Raeid said this is the result of the Central Bank of Libya’s intransigence not to standardize the official foreign exchange rate and to open the other legally permitted means of payment.
He said the Tripoli government should extend its decision, as it had done on previous occasions, to allow the import of goods without LCs until the Central Bank extends its decision to solve the existing and unjustified problem, which is to adjust the official exchange rate and unify it for all purposes to eliminate corruption.
The unification of the official CBL foreign exchange rate will lead to the increased availability of commodities, the lowering of their prices, the elimination of the parallel market, the availability of liquidity and the resolution of all (economic) problems, he concluded.
Analysis
It will be recalled that the Tripoli CBL will only allow goods to be processed through Libyan ports if they had been paid for through an official local bank’s Letter of Credit. Libyan traders that pay for imports through other documentary means, or on credit or cash or advance payment – have had their goods stranded in ports for months.
The CBL sees its policy as a means of reducing demand for hard currency in the black-market in the hope of keeping the black-market exchange rate low or lower so as to control prices, inflation and control the Libyan consumer’s purchasing power and standard of living.
The Tripoli Libyan government does not agree with the CBL’s outlook and policy.
For further detailed analysis see:
Tripoli Finance Minister says Tripoli CBL is using monetary policy incorrectly
CBL governor Elkaber blames Presidency Council for credit drought
Tripoli Audit Bureau head Shakshak blames CBL and Serraj PC for financial woes
