Belgasem Hafter reneges on US-brokered agreement by refusing to cut development spending – sends dinar crashing

After days of steady gains by the Libyan dinar on the black-market foreign exchange from a high two weeks ago of around LD 10.50 per dollar to a low of LD 8.22 at one point yesterday, the dinar lost value on opening today (to LD 9.18) after Belgasem Khalifa Hafter announced he would not adhere to a cut in public spending on development projects in an official statement published yesterday.

Hafter was speaking in his role as the head of the eastern based the Libyan Development and Reconstruction Fund. The Fund has spent billions in development and reconstruction projects mainly in Sirte, Benghazi and Derna. The Fund has reconstructed the Storm Daniel destroyed Derna in record speed. The spending has been rubber-stamped by the Speaker of the House of Representatives, Ageela Saleh.

However, there is no honest oversight or political accountability of the spending by the Hafters. Moreover, there is no fiscal control with regards to spending within Libya’s actual annual oil revenues. Libya has been running on an annually recurring hard currency budget deficit for years. This has been covered by the Tripoli Central Bank of Libya from its hard currency reserves and investments.

This uncontrolled public spending by both the western and eastern regimes (dubbed as an unending publicly sponsored election campaign by critics) is seen as the main contributor to the devaluation of the Libyan dinar on the foreign exchange black-market. This loss of value in the dinar has hit the standards of living of Libyans hard – leading to demonstrations during the fasting month of Ramadan.

Moreover, the US had brokered an agreement (Unified Development Programme) in Tunisia last February between western and eastern Libya to control development and budget spending to within Libya’s actual annual revenues.

Belgasem Hafter now seems to have reneged on this agreement.

In its official statement issued from Benghazi, the Libyan Development and Reconstruction Fund reiterated its commitment to continuing its development and strategic projects across various cities, within a national vision based on comprehensive reconstruction and achieving sustainable development.

The Fund clarified that the outcomes of the meeting held in Tunisia regarding the Economic Track Committee do not represent the eastern and southern regions of Libya and are not binding upon it. It emphasized that any tracks that do not reflect genuine representation will not be considered.

The Fund also affirmed its full commitment to applicable laws and regulations and its continued implementation of its development plans, independent of any political disputes, to ensure the advancement of development and the achievement of stability and growth throughout the country.

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