The Libyan Finance Ministry of the Government of National Unity (GNU) revealed the reasons behind the liquidity crisis affecting commercial banks in Libya, coinciding with the Eid al-Fitr holidays.
The ministry cited various factors contributing to the recurring crisis, including continued parallel spending reliant on counterfeit currency printing. This practice has eroded citizens’ trust in banks, leading them to withhold deposits for fear of receiving counterfeit currency in return.
Consequently, informal transactions have become preferable, based on trusted currencies, according to the statement.
The statement added that discrepancies in covering bank credits without adequate dinar backing or partial coverage, alongside reliance on parallel spending, have strained liquidity supply relative to foreign currency sold by banks.
Addressing reports from the Central Bank of Libya on revenue and expenditure in Q1 2024, the Finance Ministry explained the absence of telecommunications revenue, attributing it to year-end licensing, marked as a special category. “However, this was not clarified to the public, leading to the misconception of zero value,” it added.
Regarding foreign currency usage in January 2024, reported at $7.186 billion but actually around $984 million, the ministry clarified that it included oil and electricity sector needs, overseas salaries, medical treatment abroad, and student grants.
“Nonetheless, a vague entry about public commitments unrelated to the report period or impending obligations misled readers,” it noted.
The Finance Ministry stressed its readiness to collaborate with the Central Bank of Libya, the Attorney General’s Office, and regulatory authorities to curb parallel spending dependent on currency counterfeiting, expressing a commitment to address the issue effectively.
On Monday, the Central Bank of Libya (CBL) released revenue and expenditure data for the first quarter of 2024.
During this period, total expenditure reached 13.5 billion Libyan dinars, while state revenues amounted to 23.8 billion dinars. Salary payments accounted for 10.3 billion dinars, with state operating expenses at 528 million dinars.
Foreign currency revenues stood at 4.8 billion dollars, while total state obligations and commitments reached 10.5 billion dollars, resulting in a deficit of 5.7 billion dollars.
According to CBL data, Prime Minister of the Government of National Unity (GNU) Abdelhamid Dbaiba disbursed over a billion dinars in the first three months of the current year. His expenses covered various categories, including Cabinet expenses exceeding 295 million, and Defence Ministry expenses surpassing 661 million dinars.
The Central Bank also highlighted that the Interior Ministry, led by interim minister Emad Trabelsi, spent over 837 million dinars during the same period. Meanwhile, Health Minister Ramadan Abu Janah disbursed over 568 million dinars.
Total expenditure by the Higher Education ministry during the three months amounted to over 396 million dinars.
The Finance Ministry’s expenditures totalled over 4.823 billion dinars, while the Ministry of Social Affairs spent over 1.942 billion dinars.
