Libyan economic reform plan agreed at US-brokered Tunis meeting
By Sami Zaptia.
London, 6 June 2018:
An economic reform plan for Libya was agreed at a meeting in Tunis yesterday. The meeting was organized by the US embassy to Libya and was attended by the US Chargé d’Affaires, Stephanie Williams.
The Libya Economic Dialogue meeting was the 8th such meeting which was attended by two members of the Presidency Council (PC), Ahmed Maitig and Fathi Majbri, together with Tripoli-Central Bank of Libya Governor (CBL), Saddek Elkaber. Majbri is the PC member in charge of the budget and economic affairs.
Notably, the Tripoli-based Audit Bureau, which usually attends, did not attend. It has had a fallout with the CBL which it accuses of being directly responsible for Libya’s economic austerity. The Audit Bureau together with the PC and CBL has been jointly responsible for approving Libya’s budget. It is not clear if its absence will reduce the likelihood of the success of these reforms. However, over the years the Audit Bureau has been bullish in pushing the CBL for proactive economic reforms.
The meeting agreed on four main economic measures designed to ease pressure on state spending and help alleviate the current economic burden on Libyan citizens, and especially the poorer sections of Libyan society.
These four measures are:
1) The reduction of subsidies on fuel and increasing its price from the current LD 0.15 a litre (about US$ 0.11¢ a litre at the official exchange rate).
2) The increase of the amount of the foreign currency annual allowance at the official rate of exchange, currently set at $500 per person.
3) The reactivation of the child allowance which has been frozen due to lack of state funds.
4) The devaluation of the Libyan dinar.
An ambitious target was set for the implementation of the plan, with the economic reforms planned to be in place by the end of July 2018. The increase in the annual foreign currency allowance and the reactivation of the stalled Child Allowance were meant to mitigate the effects of the reforms, especially those of fuel subsidies.
It will be noted that none of these agreed measures are new or a surprise. They have been discussed ad nauseam in Libya at various occasions and events organized by various bodies over the years. They had also been discussed at several of the previous economic dialogue sessions in Tunis, without result.
The Audit Bureau’s 2017 annual report which alleged wrongdoing and corruption in a number of state entities was also discussed at the meeting.
At the end-of-meeting press conference, CBL Governor El-Kabber said that ‘‘The march of economic reforms and the suffering endured by the Libyan citizen are deep and our pursuit and our endeavours today culminated in a series of reforms that we affirm.
Of course, what we have arrived at today is the best that could be achieved in view of the current Libyan circumstances, and we really hope that we will move beyond this stage and that, with all the reforms, we may, as far as possible, raise the suffering of the Libyan citizen.
We are all working together to fix what can be repaired hopefully according to the subject schedule we are optimistic about the results of these treatments’’, concluded El-Kabber.
In her concluding remarks, US Chargé d’Affaires, Stephanie Williams. said ‘‘We congratulate the Libyan participants for their work to formulate a budget and coordinate on fiscal and monetary policy. We are pleased by the participation today of representatives from the Ministries of Finance and Planning, the Central Bank of Libya, the Libyan House of Representatives, the High State Council and the National Oil Corporation. With the consolidated national budget for 2018 in place, the institutions that matter most to the daily lives of Libyans are in a place to receive funding, including schools and universities, community health centers and clinics, and municipal services like water and electricity. The next step will be to ensure that budget disbursements are made on a consistent basis and with full transparency, so that the Libyan people receive the crucial services they deserve.
The international community represented here today by the U.S., British, French, German, Italian, European Union, IMF, World Bank, and UN missions to Libya all share a concern for the economic situation in Libya, the critical importance of economic stability, development, and stronger growth, and the importance of government institutions to deliver public services to Libyan citizens. Economic reform is not easy under any circumstances. The challenges Libya currently faces are particularly difficult, but this makes reform even more essential. Structural changes are necessary to stabilize Libya’s economy, to put your country on the path to prosperity, and address the daily hardships that Libyans continue to face. We are encouraged by the commitment of Libya’s political and economic leadership to address these challenges and reach agreement on the financial arrangements, but more must be done to address exceptionally difficult circumstances Libyans continue to face on a daily basis.
We believe that progress on economic reforms will support stabilization and improve the lives of all Libyans. We urge institutions and communities to come together to protect Libya’s natural resources and distribute Libya’s wealth fairly to communities making legitimate demands for basic infrastructure and services.
With elections on the horizon, the Libyan people will be able to exercise their voice and vote for leaders who can be good stewards of Libya’s wealth. We urge all political leaders, ministers, and Libyan government officials entrusted with public resources to manage them judiciously, increase transparency, and minimize fraud, waste, and abuse of power. As noted in the 29 May 2018 Paris declaration, Libya’s institutions, including the Central Bank, must unify in order to effectively implement the change the country requires.
Lastly, I want to thank our colleagues from the international community, International Monetary Fund, and World Bank for supporting and providing their expertise and feedback on Libyan economic policy. Your participation today reaffirms the international community’s efforts, led by UN Special Representative of the Secretary-General for Libya Dr. Ghassan Salamé, to build a more secure, stable, and prosperous future for all Libyans’’, Stephanie Williams concluded.