Central Bank of Libya Official Warns Militias Will Refuse Oil Agreement


The Head of the Liquidity Crisis Management Committee at the Central Bank of Libya (CBL), Ramzi Al-Agha, stated that he expects the oil production agreement to be rejected by militias.

During a television interview, Al-Agha questioned the banking situation in the country: “What was the point of opening electronic clearing houses in the eastern region, through the Al-Wahda bank, and not selling foreign currency? This, on the pretext that their balance is not sufficient to buy currency from the CBL of Tripoli? Actually, their CBL accounts in Benghazi are in the billions of dinars!” They succeeded in closing the system, and transferring their funds between the banks of Libya, Benghazi, and Tripoli. This was under the pretext of electronic clearances that were deliberately delivered.”

He pointed out that Al-Wahda bank was prevented from transferring its funds directly to the CBL in order to buy foreign currency. Consequently, it was unable to open lines of credit, and it may be unable to sell, or make personal transfers. He pointed out that the problem has existed for two years, and that it is largely caused by the CBL Governor, Siddiq Al-Kabeer.

Al-Agha emphasized that the terms of the new oil production agreement dealt with all major issues, including the liquidity crisis. “The agreement dealt with the equitable distribution between cities. This will have a positive impact on the services provided by municipalities,” he said.

“Electronic clearing houses have been approved, because they are within 24 hours of collecting checks between banks,” he explained. Restrictions have been placed, so that the value of a bond should not exceed 250,000 dinars. There are instruments that may be rejected as a result of their affiliation with the Interim Government, or any party outside the Government of National Accord (GNA). Banks in Tripoli, some of which have now put in place these restrictions, refuse deposits of more than 10,000 dinars. They also refuse to issue certified bonds of more than 20,000 dinars.

These restrictions have led to an increase in the selling prices of foreign currency. A check certified by Jumhouria bank, and one certified by the Ministry of Development, has a difference of about 800 dirhams. Al-Agha went on saying: “Al-Kabeer prevents any solution to the bank’s problems. Therefore, the reason for his visit to Turkey was to provide guarantees to Ankara that they would implement all the agreements that were signed with the GNA.”

He stressed that the liquidity crisis in the eastern region is still present. It has increased due to the influx of foreign currency, after the withdrawal of funds from Al-Wahda bank and the Bank of Commerce & Development.

The CBL official added that, “When the National Oil Corporation (NOC) sells the oil, there is an account in which the sales are monitored, and then it is transferred to the CBL’s account. The bank reflects the value of the sales to the Ministry of Finance, which is called the oil revenue account, and this is the mechanism. The banking system depends entirely on selling foreign currency. If the exchange rate in the bank is equal to the black market, the demand for foreign currency will decrease.”

Al-Agha believes that the borrowing process that the GNA practiced for years, has not negatively affected banks. He stated it was rather an investment, through legal lending.
Commercial banks have sought to lend to the government through bonds. He explained that the eastern banks have an excellent credit, thus denying rumours circulating regarding the declaration of bankruptcy of some banks, due to government borrowing.

Al-Agha emphasized that the Russian printed currency has nothing to do with the collapse of the value of the Libyan dinar. Rather, he claimed that those who determine the exchange rate and black market determine the collapse of the dinar. He also stressed that the printing of dinar in Russia is legal, and in accordance with the banking law.