Inflation, cash crisis hit ordinary Libyans

Libyans swap jewellery for medical treatment as crisis bites

TRIPOLI, Nov 16, (RTRS): In a square behind Libya’s central bank, black market dealers, some of them armed, carry small plastic bags filled with dollars and larger ones with dinars in and out of one of many informal exchanges.

Traders buy food and other goods from abroad at the official rate and sell them at the unofficial one, pocketing vast profits; others make equally large sums by smuggling out heavily subsidised fuel.

In the back streets of the old city meanwhile, ordinary people have resorted to selling jewellery or dollars hidden at home as six years of post-dictatorship chaos take their toll.

“I haven’t been paid for four months,” said Fatima, 40, from the southern city of Sabha as she sold three small gold charms to pay for diabetes treatment for her sister, Hasina, who added: “We’re helpless, there’s nothing else we can do.”

In other signs of rising poverty, elderly women beg motorists for cash on Tripoli’s streets and families queue for charity food handouts.

The UN estimated that about 1.3 million people in Libya need humanitarian assistance this year.

This file photo shows the fist copy for test of the 200 medium-haul Airbus A320neo passenger plane leaving its hangar at the Airbus plant in Saint-Martin-du-Touch, near Toulouse, southern France. Airbus said on Nov 15 it has secured the biggest-ever order in its history to supply 430 of its medium-range A320 family of aircraft to US investment firm Indigo Partners, at a catalogue price of $49.5 billion (42 billion euros). (AFP)

Their situation took another turn for the worse in the past two weeks after the black market rate of the dinar, which has long languished at record lows, slid again, fuelling inflation that is already around 25-30 percent.

The central bank blamed the audit bureau and the UN-backed government for restricting letters of credit that fund basic supplies to a divided country where a security vacuum and smuggling networks have destabilised the wider region.

Officials had come across suspect requests - one to import tuna worth $120,000, more than the country consumes in a year, according to a Libyan entrepreneur who declined to be named, fearing retribution from Libya’s powerful armed groups.

Just $2.5 billion of an expected $7.4 billion of credit has been allocated, the trader said, helping knock the dinar from around 8.5 to 9.25 against the dollar on the black market. Its value has fallen by more than 600 percent since early 2014.

The economy ministry was not immediately available for comment on a complex credit system that passes through commercial banks and where the audit bureau had documented earlier abuses and lack of oversight.

“We’re talking about an extremely bad economic and financial situation,” Central Bank Governor Sadiq al-Kabir said in a rare news conference on Tuesday. “Everyone, whether legislative or executive, holds responsibility equally.”

Traders and economists say political uncertainty is a major factor weakening the currency, with UN talks to broker a deal between rival factions currently suspended.

Libya is struggling to fund food imports and defend its foreign reserves, which the World Bank estimates will stand at $67.5 billion at the end of this year, compared to $123.5 billion in 2012.

International experts say the only way to resolve the issue is to devalue the dinar from the official exchange rate of 1.37 to the dollar, but agreeing an economic strategy in a country dominated by armed factions with rival governments and no budgets is no simple task.

A powerful or well-connected minority who are profiting from a flourishing shadow economy have little interest in change.