Surging Dollar Sparks Concerns in Libya

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The unprecedented rise of the US dollar against the Libyan dinar has set off alarms across Libya. As an oil-exporting nation, the impact of such financial turbulence is acutely felt among its citizens, who are increasingly worried about the escalating cost of living tied to the currency’s volatility.

This economic upheaval was marked by a pivotal moment when the exchange rate in the black market crossed a new threshold, positioning the dollar at over 6 Libyan dinars, a stark increase from the long-maintained rate of 5 dinars per dollar.

Concurrent with the currency’s downturn, the Central Bank of Libya (CBL) declared a fiscal deficit surpassing $11 billion. According to its report, the past ten months saw foreign currency earnings of $19.7 billion, overshadowed by expenditures that soared to $30.6 billion.

Financial experts lay the blame for the devaluation of the dinar at the feet of haphazard government spending, and the oversized fiscal footprint. This is coupled with the influence exerted by traders within the black market.

Suleiman Al-Shahoumi, a prominent economic analyst, traces the root of the dollar’s climb to a scarcity in supply. As well asrestrictive measures enacted by the CBL, which has selectively granted credits, breeding a sentiment of pessimism among currency traders. This, he suggests, is compounded by the bank’s opaque regulations, eroding confidence in the market.

Adding to the discourse, Ismail Shtewi, a {residential candidate, points the finger at the Central Bank and the Government of National Unity (GNU) led by Abdel-Hamid Dbaiba for the surge in the dollar’s street value. He criticises the government’s spendthrift approach, which he claims has derailed efforts to bridge the deficit gap.

The eastern-based Libyan Parliament-designated government, accuses the black market’s currency speculators of artificially inflating the dollar’s value, and sees this as a direct assault on the country’s economic stability.

In an official communiqué, the government labeled these trading schemes as “the desperate last stands of those seeking to sustain a cycle of corruption, and illegal gains, and to halt the progress of national reconstruction and development initiatives.”

The skyrocketing dollar rate has swiftly become a major source of distress for Libyans, casting a shadow of concern over the potential hike in living expenses, should the exchange rate continue its unstable trajectory.