By Sami Zaptia.
London, 12 March 2016:
Libya has been banned from importing any US dollars by the international community and this has . . .[restrict]contributed to the acute rise in the black market exchange rate between the Libyan dinar and the US dollar, the Central Bank of Libya’s official spokesperson Essam El-Oul said.
El-Oul was commenting on the financial crises that Libya is going through in the form of very high FX rates, cash shortages at banks with cash withdrawal limits, rising consumer goods prices and a loss of confidence in the economy.
The ban on Libya importing US dollars was imposed in 2013 as a result of the bank heist (believed to be by extremist Islamists) on the CBL’s Sirte branch.
El-Oul said that there is about LD 24 bn in cash outside the banking system and that the cash crises at banks and the public’s unwillingness to deposit their cash in banks is caused by the combination of the fall in Libya’s oil production/exports and the fighting and political divisions in the country.
He added that if only 10 percent of this LD 24 bn is deposited in banks, it would solve Libya’s current cash crises. He rejected conspiracy theories that the cash crises is an artificially created crises.
Commenting on the recently announced plan by the CBL to pump US$ 2 bn into the system, El-Oul pointed out that it will not be in the form of cash but in the form of US dollars to cover the opening of LCs for the import of ‘‘essential foodstuffs and medicine’’ for the month of March.
And as a result of the international ban on Libya importing US dollars, the LCs that will be opened by the CBL will be covered through the Libyan state’s dollar deposits abroad. These deposits will only be used to cover the import of ‘’essential foodstuffs and medicines’’, he explained.
Meanwhile, one leading Libyan businessman and a regular and well established importer confirmed to Libya Herald yesterday that while there has been lots of talk by the various Libyan institutions concerned, however, no concrete steps have been taken yet regarding the opening of LCs to importers.
He also noted that it was highly unlikely that any foreign banks, including Libyan JV banks abroad, would confirm any LCs from Libya. This is because they would not be able to comply with the CBL’s recently introduced conditions – deemed unfulfillable by the Libyan business community. [/restrict]