Thursday, May 19, 2022

Libya begins to use new exchange rate as economy struggles | Middle East News

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The Central Bank devalues ​​the country’s currency in an attempt to save the faltering economy damaged by years of conflict.

The Central Bank of Libya on Sunday introduced a new unified exchange rate agreed to last month after years of division between rival branches based on opposite sides of the front line.

As part of the change, the internationally recognized government of national agreement (GNA) in Tripoli suspended the fees on foreign exchange transactions that it introduced two years ago to bring the official rate closer to the black market rate.

The board of directors of the Central Bank of Libya agreed to the new 4.8 dinar rate for the United States dollar last month in its first full meeting for five years after the split when the country split between the western and eastern factions.

In Tripoli, the black market rate on Sunday was 5 dinars to the dollar after dropping to the new official rate last week.

“We’ll have to wait three or four months to see how things go in commercial banks,” said Amer, a currency trader.

The eastern black market’s foreign exchange shops were mostly closed on Sundays until the market stabilized.

Malik al-Fakhri, an electronics dealer in Benghazi, said he stopped using banks after 2013 because he lost too much money importing at the official rate and instead turned to the black market.

“The most important thing for the trader is stability,” he said.

The new rate is effective devaluation, which means that the cost of imported goods is likely to increase.

“This decision is a mistake that will harm citizens more than it benefits them and only aims to satisfy traders,” said Hathem al-Barghathi, also in Benghazi.

These measures are part of a broader effort to address economic obstacles to peacemaking, encourage the implementation of previously agreed reforms and curb opportunities for corruption.

However, while fighting between the GNA and the Libyan National Army (LNA) based east of Khalifa Haftar mostly came to a halt in June after its assault on Tripoli collapsed, diplomatic progress towards a solution politics have slowed down.

A ceasefire agreed in October in Geneva was only partially implemented, with troops still occupying frontline positions, a main coastal road still closed and foreign mercenaries still in place.

Meanwhile, as the group of Libyans chosen by the United Nations to chart a course for democracy set elections for the end of this year, they were unable to agree on a new unified government to oversee the transition period.



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