The controversy erupted after the Central Bank of Libya reported a $5 billion foreign currency deficit in the first half of 2025 and highlighted the widening gap between the official exchange rate of 5.41 dinars per dollar and the parallel market rate of 7.84.
Supporters of currency liberalization argue that subsidizing the exchange rate drains state revenues. Prominent businessman Husni Bey, a long-time advocate of a full float, insists that maintaining the official rate is unsustainable when the government collects $100 million daily in oil income.
Economist Imran al-Shaibi has called for a managed float supervised by the Central Bank through transparent auctions, coupled with temporary social protection to shield vulnerable households.
But opponents warn of disastrous consequences for ordinary Libyans. Former Central Bank board member Maraj Ghith described the idea as “economic suicide,” stressing that with 85% of Libya’s basic goods imported in dollars, a float would erode purchasing power overnight. Banker Ibrahim Wali echoed these concerns, warning that devaluation would sharply raise import costs, fuel inflation, and put immense pressure on consumers and small businesses.
Food inflation is already climbing. In August, some fish prices doubled, while chicken rose by 21% compared to July. Analysts warn that floating the dinar could worsen this trend, shrink real wages, bankrupt local firms reliant on imports, and widen social inequality. Economist Youssef Yekhlaf Masoud even cautioned that it could spark protests and instability.
There are also concerns that in Libya’s deeply corrupt environment, ranked 173rd of 180 countries on Transparency International’s 2024 Corruption Index, currency floatation could be manipulated to finance illicit activities, from human trafficking to narcotics.
The Central Bank has sought to calm speculation, stating that it has “no intention” of floating the dinar under current conditions.
Former Central Bank official Mohammed Abu-Sneina stressed that such a step requires a unified government, fiscal discipline, and a diversified economy. Until then, economist Atiya al-Fitouri argues, a fixed exchange rate remains Libya’s best option.
For many Libyans, however, the fear remains that any move toward floatation would serve elites and speculators rather than citizens, leaving the public to bear the cost through higher prices and deeper inequality.
