Financial problems in eastern Libya are aggravating a national cash shortage. Debts believed to be in the tens of billions of dollars, are causing local banks to suffer, according to Reuters news agency.
Once one of the richest countries in Africa thanks to oil exports, Libya has crumbled since its 2011 uprising. It is now divided between two rival governments, and institutions on the either side of the country.
The war between the Tripoli-based Government of National Accord (GNA), and Khalifa Haftar’s eastern-based Libyan National Army (LNA), has intensified in recent years. This has caused the country’s economic problems to also grow. The difficult living conditions – including daily power cuts and fuel shortages – have prompted protests in both western and eastern Libya in recent weeks, thus adding to the political pressures faced by both sides of the conflict.
A blockade of oil exports by the LNA since January was lifted last month, and revenue is gradually starting to flow back into the country. However, this blockade has cost Libya more than $10 billion in lost income. Oil receipts are paid into the Tripoli-based Central Bank of Libya (CBL), which then pays salaries of most state employees, including in areas held by the LNA.
People often use cheques instead of cash, but these tend to bounce as banks try to control their own cashflows. One man who tried to buy land worth 30,000 dinars, was told by the bank he would have to make three separate payments over a longer period, instead of paying it all at once. Cheques in dollars can also be exchanged in eastern Libya for different values. This depends on which bank has issued them. “We got to the point where banks are unable to provide funds, and this reflects on the prices of goods where there are shortages,” said Asam Al-Abairesh, the head of the payments department of the eastern CBL.
Both the western and eastern CBLs are now subject to an international audit under the United Nations. This is with the eventual aim of reunifying Libya’s institutions.