Spending on construction has not led to price hikes and a rising dollar rate – spending by Libya’s two governments has: Belgasem Hafter

Speaking last Monday (6 April) during an opening ceremony of a department at Benghazi Medical Centre, the Director General of the Libyan Development and Reconstruction Fund, Belgasem Khalifa Hafter, said “Do not listen to the naysayers who claim that reconstruction has led to price hikes and a rise in the dollar exchange rate. The reconstruction budget is allocated annually, and we have directed it in the right direction.

The high prices and the rising dollar exchange rate are due to the spending of the two governments and the ongoing division in Libya.”

Haftar added: “The Development and Reconstruction Fund spent no more than 12.8 billion dinars on all projects in 2025, despite the large geographical area in which we operate, encompassing eastern, southern, and central Libya. We have allocations for 2026. The high prices are due to the excessive spending of the two governments. Accusing the Fund and its reconstruction efforts of causing price increases is baseless.”

Hafter was responding to continuing claims by Central Bank of Libya Governor, Naji Issa, and Tripoli based Libyan Prime Minister, Abdel Hamid Aldabaiba, that the eastern-based regime as a whole has spent around LD 600 billion in out-of-budget (parallel) spending. This includes spending on development projects.

This high spending is blamed for the excessive demand for the dollar which has caused the dinar to lose value on the black-market foreign exchange. The eastern regime is accused of hoovering up all the dollar offered on the foreign exchange black-market to pay for its excessive spending.

The rise in the dollar’s exchange rate has led to a spike in prices as Libya imports almost all of its products, including food and consumer products.

It must be noted that Governor Issa has accused both governments of overspending on projects.

The US-brokered Unified Development Programme
It will be recalled that the US had brokered between the two Libyan governments in Tunisia, last February, the so-called Unified Development Programme. The programme, part of the wider effort to have one unified budget for the whole of Libya, aims to limit development spending by both governments to within Libya’s actual revenues. Currently Libya is running a perennial dollar deficit being covered by the CBL from its earnings and savings deposits.

However, Belgasem Hafter seems to have changed his mind about the Unified Development Programme, making several public pronouncements indicating he would not curtail development spending.

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