Photographer: Gianluigi Guercia/AFP via Getty Images

Libya Central Bank to Intervene in ‘War’ on Dinar in Coming Days

  • Oil export disruptions have cost Libya $160 billion since 2013
  • Many depositors have lost confidence in the banking sector

Libya’s central bank will intervene “intensively” to defend the country’s currency, the Tripoli-based governor said Sunday, as officials struggle to rein in a rampant black market and revive an economy in shambles after years of war.

The central bank “will not stand helpless or neutral in the war that our currency is subjected to,” he said. It is planning to intervene “intensively in the coming days to restore the financial situation and to defend the dinar,” he said, in coordination with the internationally backed unity government and the rival Tobrouk-based parliament.

Feuding militias, militant threats and the establishment of rival governments have stymied efforts to rebuild Libya following the 2011 uprising that ousted Moammar Qaddafi after more than 40 years in power. Officials have described the financial sector as verging on collapse. 

Libya has Africa’s largest proven crude reserves. But disruptions in oil exports, the country’s main source of revenue, have cost the country $160 billion since 2013, affecting not only cash reserves but also the value of the dinar, Al-Kabeer said. Rival governments and civil war have devastated confidence in the banking sector and left businesses unable to operate.

That has spawned a vibrant black market in which the currency is trading at about 9 or 10 dinars to the dollar, compared to the official rate of 1.4 to the dollar. 

Liquidity circulating outside the banking industry has surged to about 30 billion dinars, or nearly 70 percent of the total, compared to 9 percent in 2010, al-Kabeer said.

Al-Kabeer didn’t outline what steps the regulator would take, but said solutions to the country’s problems require bridging the political divisions in government and uniting key state institutions such as the National Oil Corp., which oversees the country’s oil reserves He also called for curbing public spending, reviving the private sector and boosting growth and investment opportunities.

Uniting the nation has been an elusive task in the post-Qaddafi era. The central bank itself, like the National Oil Corp., has two chains of command, with al-Kabeer heading it in Tripoli and another command headed by a former deputy operating in the east. 

— With assistance by Tarek El-Tablawy

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