An expanded meeting was held yesterday at the Tripoli Chamber of Commerce’s Tripoli headquarters to discuss the repercussions of monetary policies and the recent economic changes in the country.
The meeting included several chamber members, representatives from Zawia Chamber of Commerce, the Libyan Foundation for Economic Consulting, the National Union of Libyan Workers, and several other unions and entities.
CBL’s recently imposed controversial import taxes
Attendees discussed the effects of the recently announced import tax forced through controversially by the Central Bank of Libya (CBL), in collusion with the leadership of the House of Representatives.
Negative effect of the new tax
According to participants, this tax has led to an increase in the prices of goods and services, which has increased the burden on citizens and directly impacted commercial activity. Furthermore, it has had negative repercussions on the value of the Libyan dinar and market stability.
Threat of peaceful demonstrations and sit-ins
The attendees also discussed several proposals for addressing these developments, including calling for a peaceful protest and sit-in to express their rejection of the tax on imported goods and to demand its cancellation, as well as emphasizing the need to initiate urgent economic reforms.
Need to open an urgent national dialogue to develop practical solutions
The participants stressed the importance of opening an urgent national dialogue that includes economic and trade experts and representatives of the public and private sectors to develop practical solutions that contribute to stabilizing monetary policy, protecting citizens’ purchasing power, and supporting the national economy during the current period.
At the conclusion of the meeting, the attendees issued a statement containing five main demands:
1-The reversal of the CBL / House of Representatives’ leadership decision to impose new taxes on imports due to its negative impact on prices and standards of living and confusion in the import process due to differences in import taxes.
2-The increased monitoring of Letters of Credit (LCs) granted by the CBL to importers, at the lowest and official foreign exchange rates, to prevent LC fraud and its use in foreign exchange arbitrage activities.
3-The hastening of structural economic reform to control public spending and the foreign exchange rate.
4-The undertaking of an assessment of the effects of the devaluation policy of the Libyan dinar.
5-The holding of an urgent national public debate between decision makers, private sector and those with responsibility.
The statement was read out by a representative of the attendee at the end of the meeting and a video of it was posted on Tripoli Chamber’s social media page.
Background to Libya’s recent economic crisis
While Libya’s economic crisis can be traced back to the 2011 revolution and the country’s subsequent political split between west and east Libya, it will be recalled that the recent devaluation of the Libyan dinar by the CBL has led to the black-market exchange rate of the Libyan dinar against the US dollar skyrocketing to over the unprecedented LD 10.50 per dollar mark.
With Libya estimated to import over 80 percent of its food consumption, any devaluation of the dinar leads to increase of prices, the cost of living and a depreciation of standards of living. With most Libyans working for the state on fixed, non-inflation-linked salaries, price rises are not compensated for by annual pay rises.
The leadership of parliament (the House of Representatives – HoR), without a discussion or vote by HoR members, has also colluded with the CBL Governor to attempt to force through new controversial import taxes. This move was rejected by 107 HoR members, the High State Council and the Aldabaiba-led Tripoli based Libyan government.
The tax was not discussed by HoR members, but was simply, and illegally opponents say, passed by the leadership of the HoR in collusion with CBL Governor, Naji Issa.
The HSC, for its part, has proposed an economic reform package that includes abolishing the controversial import taxes, suspending government development spending, prioritising imports and monitoring the issuing and issued LCs.
Aldabaiba, meanwhile, blames the economic crisis and the collapse in the value of the Libyan dinar on the exorbitant spending by the eastern Hafter regime. The CBL, however, blames both governments for excessive public spending.
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107 HoR members state that they have not issued the decision to impose new import taxes
CBL devalues Libyan dinar by 13.3 percent to LD 5.56 per dollar
CBL’s latest revenues and spending data reveals a dinar surplus but a dollar deficit
