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By Sami Zaptia.
London, 22 July 2020:
The Financial Stability Unit of Libya’s eastern-based Central Bank of Libya yesterday released its annual report for 2017.
The (eastern) CBL is serious about building a database and integrated indicators for the financial sector in support of assessing the country’s economic and financial performance, eastern CBL ‘‘Governor’’ Ali Hibri said in the introduction of the report.
He said that the CBL wants to propose policies that will mitigate the cyclical shocks in crude oil prices, which is currently Libya’s overwhelming source of revenues.
Hibri explained that the CBL’s first (2016) and second (2017) reports had clearly shown that the creation of a basic database through which financial stability indicators are built is one of the most important challenges facing any attempt to study financial stability and forecast its indicators in Libya.
He pointed out that all reports confirm the instability of oil revenues, which made the process of stability out of reach and just an illusion. It made the process of development a dream and thus the excessive consumption pattern of the national economy has become dominant, adding that the financial statements of non-banking institutions are almost non-existent.
Hibri called for intensified dialogue with these institutions to enable the production of periodic and regular data that can contribute to enriching the financial and economic database. This would help build sufficient indicators of stability and disclosure to ensure that the contribution of all sectors to the economic process is enhanced, which is supposed to be diversified economy contributed to by the private sector with a substantial and influential percentage
The eastern CBL Governor said the financial depth of the Libyan state remains fragile, which requires research, development and the creation of financial projects capable of absorbing cash supply outside banks in vessels that contribute to building the economy, creating jobs and creating cash income pathways that benefit groups of society.
The 2017 CBL report confirmed that the low rate of macroeconomic growth, low crude oil production rates and high inflation have affected the financial stability of the country.
The report also explained that the cancellation of interest rates, the rise of non-working direct facilities, the depreciation of the guarantees placed against non-working direct facilities, the exchange rate risks of the decline/rise in the exchange rate of the Libyan dinar – also affected financial stability.
The report suggested that liquidity risks and the withdrawal of part of stable and unstable deposits from individuals and companies, and the level of deficits in the public budget, and public debt – also affected the financial stability of the Libyan state.
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