Tripoli based Libyan Minister of Economy Mohammed Al-Hwej, in an exclusive live interview yesterday with the Istanbul-based Libyan satellite TV station Libya Al-Ahrar, said more than 30% of Libyan citizens have reached the poverty line according to international standards.
Hwej was conducting a critical overview of Libya’s stuttering economy which has been struggling with a fall in international crude oil prices, its oil production unable to move beyond 1.5 million barrels per day, the Libyan dinar losing value on the black-market, a structurally unreformed, undiversified rentier-socialist state system with little value-added productivity.
This has been compounded by uncontrolled spending by both Libya’s governments leading to a hard currency budget deficit – all contributing to reducing the spending power of Libyan citizens.
Economy Minister Hwej criticised the Central Bank of Libya (CBL) for monopolising trade policies, with the Ministry of Economy completely excluded from determining the local market’s needs for goods.
He said official bank import credits for are being granted by the CBL based on priority of booking and demand, not according to market needs, due to the monopoly and control of major merchants.
Hwej expressed his concern about the depletion of Libya’s hard currency reserves. He said there is a major flaw in the management of foreign currency and reiterated that his Ministry of Economy is not currently responsible for letters of credit.
Hwej said the Central Bank must refrain from interfering in trade policy and adhere to monetary policy. Our current involvement in the letters of credit issue can be described as forced. He stressed that Central Bank Governor Naji Issa is highly competent but added that he needs to change the Central Bank’s policies. He said the tax imposed on the dollar (surcharge) should only apply to luxury goods.
The declared that the import budget falls under the jurisdiction of the Ministry of Economy, which will assume responsibility starting this year.
For example, he said many goods are imported into Libya in quantities exceeding the local market’s needs and are being smuggled abroad.
Sugar imports, for example, have exceeded US$ 500 million annually, implying a Libyan per capita consumption exceeding 100 kg. This compares to the global per capita average of 22 kg, indicating the smuggling of excess quantities.
Libya imported luxury goods such as mobile phones worth 1.6 billion dinars, some of which were smuggled.
Fuel and petroleum product smuggling, he revealed, has reached approximately US$ 6 billion annually. This is costing the state over US$ 20 billion over the past three years.
Some goods imported under Letters of Credit, opened at the preferential official exchange rate as opposed to the more expensive black-market rate, were found not to have entered the country, while others were partially smuggled.
