PC/GNA demands CBL releases agreed 2017 first quarter budget

By Sami Zaptia.

London, 17 January 2017:

The Presidency Council/Government of National Accord’s Ministry of Finance (MoF) has demanded that the Central Bank of Libya (CBL) releases the LD 4.8 bn agreed in the Temporary Financial Arrangement (budget) to its treasury account immediately.

The demand came in a letter obtained by Libya Herald today. The letter was dated 16 January and was addressed to the CBL Governor from the PC/GNA’s Minister of Finance-designate Osama Hamad.

The letter stresses that the requested amount corresponds to the amount agreed upon in the schedule for the first quarter of 2017 which was supposed to have been released into the treasury account by 10 January.

The MoF says that the money is needed urgently in order that the MoF can start disbursing obligations and avoid blockages in the first quarter for the payment of state-sector salaries, hospitals, NOC and other urgent disbursements.

The request by the MoF that the CBL promptly handover money that is overdue for the first quarter of 2017 – as previously agreed – contrasts sharply with the CBL’s view of the timeline for the processing of the 2017 ‘‘budget’’.

In a leaked CBL letter addressed to the PC dated 9 January published by Libya Herald yesterday, the CBL announced that it was releasing US$ 750 million of Letters of Credit for the import of essential goods. It stated that it was releasing this amount early pending the approval of the 2017 ‘‘budget’’ – a process which in its view would take ‘‘no less than 60 days’’.

The two documents are very informative and expose the tensions that have continued to exist since the arrival of the PC/GNA to Tripoli in March 2016 between the CBL and PC/GNA, despite their public announcement that they had come to an agreement on the 2017 budget.

It will be noted that both the CBL and MoF refer to the 2017 budget as the ‘‘temporary financial arrangement’’ and intentionally avoid the term ‘‘budget’’. According to Libyan law, the country’s budget can only be passed by its parliament, the Tobruk-based House of Representative (HoR).

The Faiez Serraj-led PC/GNA has used a clause in the 2015 Libyan Political Agreement which permits it to pass a ‘‘temporary financial arrangement’’ in order to avoid the need for HoR approval.

However, the HoR has politically and legally contested the PC/GNA’s ‘‘temporary financial arrangement’’, insisting that the PC/GNA has misused the relevant clause in the LPA.

Irrespective of the merits of the legal interpretation of the contested clause, the PC/GNA, together with the international community, have been able to persuade the CBL and Audit Bureau of the validity of this clause. In turn, because the revenues of Libya’s hydrocarbon exports are channeled through the Tripoli-based CBL, the CBL’s approval is pivotal to the PC/GNA obtaining a 2017 budget.

It will be recalled that the PC/GNA had agreed with the CBL on a LD 37.56 bn ‘‘budget’’ for 2017 at the end of December.