Central Bank of Libya (CBL) Governor Naji Issa stated that the Bank is collaborating with various relevant institutions and stakeholders to adhere to the Unified Spending Agreement and to implement reforms across fiscal, trade, and monetary policies.
Positive steps being taken to control government spending
Releasing a statement to Libya Herald, Issa outlined positive steps being taken to control government spending and move toward adopting a unified salary scale for all state institutions funded by the general budget.
He noted a receptive response from various parties regarding these reforms, alongside ongoing work on other economic issues.
Strengthening LD a key objective in comming period
He added that the CBL aims to curb the rise in the exchange rate and mitigate its impact on the prices of goods and services, as well as to contain inflation, emphasizing that appreciating the Libyan dinar is a key objective for the Bank in the coming period.
To inject approximately US$ 3 billion to meet pending demand for foreign currency
The Governor stated that leveraging the rise in oil prices during October would bolster the Bank's capacity to inject approximately US$ 3 billion to meet pending demand for foreign currency—whether for financing letters of credit or for personal needs, including bank cards and physical cash.
To expand direct transfer facilities for small-scale merchants
Issa also noted that the Bank plans to expand direct transfer facilities for small-scale merchants, coinciding with the implementation of the Minister of Economy’s decision to mandate that imports be conducted solely through banking channels. He explained that this move would shift a larger share of foreign currency demand into official channels and support measures aimed at stabilizing the exchange market.
US$ 400 million card transaction reservations to be settled in early October
The Governor of the Central Bank of Libya announced plans to settle card transaction reservations exceeding $400 million in early October, with the aim of clearing all outstanding reservations within the month, alongside fulfilling pending requests for remittances and letters of credit.
Part of broader package of implemented measures to address FX imbalances
He emphasized that these measures are designed to provide foreign currency through official channels, alleviate pressure on the parallel market, and curb demand for it—part of a broader package of measures the Bank is implementing to address imbalances in the foreign exchange market and support monetary stability.
Comment
It will be noted that the US dollar was trading at one point today on the parallel market at LD 9.56/dollar - down over the last two days - from LD 9.63 and LD 9.75 respectively.
It will also be recalled that the CBL announced yesterday that it now aims to bring the black-market dollar exchange rate to below 9 dinars by the beginning of October.
Commentators and analysts are now questioning whether this indicates that the CBL Governor has given up on his previous vow to bring down the LD exchange rate to below the LD 7.00 mark. It is unclear if the LD 9.00 target is a short-term or the long-term target?
The Unified Spending Agreement
Commentators are also assessing if the Governor has indeed succeeded in forcing the conflicting Libyan governments in the west and east into adhering to the US-brokered Unified Spending Agreement.
It will be recalled that Governor Issa has accused both political sides of uncontrolled public spending and indicating that it is at the root of the insatiable demand for the dollar on the parallel market - and the depreciation of the dinar.
Governor Issa's August resignation threat - did it do the trick?
Finally, commentators are also assessing whether Governor Issa's short-lived resignation announcement of 10 August this year has - with international help - shocked and frightened the two competing political sides into respecting the Unified Spending Agreement.
They also note that Issa may feel more confident in demanding spending controls after his recent London visit and meetings.
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