Cash cri­sis hits Libya as CB, PM con­tinue bick­er­ing

Res­i­dents protest long wait to with­draw money

Kuwait Times - - BUSINESS -

When the doors of a Tripoli bank open, hun­dreds of fran­tic cus­tomers surge for­ward, des­per­ate for money they have been wait­ing weeks or months to with­draw. The scene, now com­mon­place, is a stark sign of Libya’s slide to­wards eco­nomic col­lapse de­spite oil wealth, and a UN-backed govern­ment’s lack of head­way to­wards end­ing years of po­lit­i­cal tur­moil and armed con­flict that have splin­tered the coun­try.

Over the past week, frus­tra­tion has spilled over into re­newed street un­rest and a pub­lic spat be­tween Prime Min­is­ter Fayez Seraj and Cen­tral Bank Gov­er­nor Sadiq Al-Kabir over who is to blame for acute cash short­ages. The dis­pute shows the UN-backed Govern­ment of Na­tional Ac­cord (GNA) strug­gling to con­trol Libya’s fi­nances even af­ter a re­cov­ery in oil pro­duc­tion raised the prospect of eco­nomic pres­sures eas­ing. A meet­ing con­vened by Bri­tain and the United States in London on Mon­day is seen as a last-ditch ef­fort to get Seraj and Kabir to work to­gether and save Libya’s econ­omy from deeper fail­ure.

The GNA cau­tiously started try­ing to es­tab­lish it­self in Tripoli in March, three months af­ter its cre­ation un­der a UN-bro­kered power-shar­ing deal and five years af­ter the up­ris­ing that ousted Muam­mar Gaddafi but sowed na­tion­wide an­ar­chy.

But the GNA has been un­able to win back­ing from lead­er­ship ri­vals in the east or tame western Libya’s pow­er­ful armed fac­tions. The wors­en­ing cash cri­sis and spi­ralling in­fla­tion quickly eroded hopes that the GNA could bring sta­bil­ity.

Some Libyans now queue overnight to col­lect wages and ben­e­fits. “I have not been paid my salary for al­most four months,” Mi­lad Lah­mar, a phys­io­ther­a­pist and father of four, said out­side Tripoli’s Al-Ti­jari Al-Watani bank. “I have been wait­ing since dawn in front of the bank in a des­per­ate at­tempt to get some cash.”

Wahda Bank, one of the coun­try’s largest, said on Sun­day its cof­fers would be empty un­til fur­ther no­tice. The Libyan econ­omy is al­most en­tirely de­pen­dent on oil rev­enues, so solid GNA re­la­tions with the Na­tional Oil Cor­po­ra­tion (NOC) and the cen­tral bank, which pro­cesses all NOC earn­ings, are cru­cial to co­her­ent gov­er­nance and pol­i­cy­mak­ing.

The NOC and the cen­tral bank both frac­tured when ri­val gov­ern­ments and par­lia­ments arose in Tripoli and east­ern Libya in 2014. The Tripoli branches, which have re­tained con­trol over pay­ments, pledged to work with the GNA’s lead­er­ship, known as the Pres­i­den­tial Coun­cil. But re­la­tions be­tween Seraj and Kabir have soured amid a po­lit­i­cal dead­lock. The east­ern par­lia­ment, or House of Rep­re­sen­ta­tives (HOR), has blocked ap­proval of GNA cab­i­nets, and the fi­nance min­is­ter has never taken up his post. The mostly pow­er­less ri­val govern­ment ap­pointed by the HOR, and its cen­tral bank gov­er­nor, have limped on in Libya’s dis­tant east.

Kabir’s man­date ex­pired in late Septem­ber, but he re­mains in the job by de­fault be­cause the HOR would have to ap­prove any re­place­ment un­der the UN-bro­kered deal. A week ago, Seraj ac­cused Kabir of hold­ing up ef­forts to deal with Libya’s liq­uid­ity cri­sis by re­peat­edly re­sist­ing calls to pro­vide credit and re­lease for­eign cur­rency. “We have ex­hausted our ef­forts ... with alKabir,” he said in a TV in­ter­view. “Once again, his re­sponse was weak and some­times non-ex­is­tent.”

Kabir re­torted three days later that Seraj’s coun­cil had only come up with “loose pro­pos­als” in­clud­ing the sale of “non-ex­is­tent” dol­lars and de­valu­ing the Libyan di­nar.

“The Pres­i­den­tial Coun­cil did not sub­mit any re­al­is­tic, ex­ec­u­tive pro­grams to be car­ried out on the ground,” he said. Libya’s oil rev­enues fell to record lows ear­lier this year and the coun­try is run­ning huge deficits, cov­ered by for­eign re­serves that will sink to $43 bil­lion by the end of 2016 from more than $100 bil­lion three years ago, the World Bank says.

Strict lim­its on ac­cess to for­eign cur­rency have cre­ated a flour­ish­ing in­for­mal ex­change mar­ket where the di­nar re­cently slipped to a new low of around 5.25 to the dol­lar.

Fi­nan­cial pres­sures have wrought short­ages of sub­si­dized food prod­ucts, push­ing food prices 31 per­cent higher in the first half of 2016, ac­cord­ing to the World Bank. Oil pro­duc­tion re­cently dou­bled to nearly 600,000 bar­rels per day af­ter east­ern mil­i­tary com­man­der Khal­ifa Haf­tar seized key oil ports from a ri­val fac­tion and let the NOC re­open them. But out­put is still well un­der half pre-2011 lev­els.

Econ­o­mists say Libya’s liq­uid­ity cri­sis will not be re­solved with­out im­proved se­cu­rity and trust in the bank­ing sys­tem. They say de­liv­er­ies of new ban­knotes sent from Bri­tain to Tripoli and from Rus­sia to the east will help lit­tle. In the cap­i­tal, res­i­dents said they no­ticed lit­tle dif­fer­ence as 800 mil­lion di­nars were flown in over the past 10 days. They say that cor­rup­tion means only the pow­er­ful have quick ac­cess to funds. “I only hear about money be­ing printed out­side Libya and brought here, but we re­ceive noth­ing,” said Lah­mar, the phys­io­ther­a­pist. “There is no trans­parency.” — Reuters

EFG-Her­mes and HSBC have been se­lected as con­sul­tants for the ini­tial pub­lic of­fer of state bank Banque du Caire, Egypt’s Deputy Fi­nance Min­is­ter told Reuters yes­ter­day. “There is no date se­lected yet for the of­fer­ing,” Deputy Fi­nance Min­is­ter for fis­cal poli­cies Ahmed Kou­chouk said. Cen­tral Bank Gov­er­nor Tarek Amer said in March that the govern­ment planned to of­fer 20 per­cent of Banque du Caire by in­creas­ing its cap­i­tal through an ini­tial pub­lic of­fer­ing. A mar­ket of­fi­cial with di­rect knowl­edge of the is­sue said the of­fer­ing will take place dur­ing the first half of 2017. Banque du Caire, estab­lished in 1952, has a cap­i­tal­i­sa­tion of 1.6 bil­lion Egyp­tian pounds ($180 mil­lion). The bank has around 240 branches and units around the coun­try. Egypt is strug­gling to re­vive its econ­omy since a pop­u­lar up­ris­ing in 2011 drove away tourists and for­eign in­vestors.

Abu Dhabi’s Al-Hi­lal Bank ap­points Craig Bell as CFO

Abu Dhabi govern­ment-owned Al Hi­lal Bank said yes­ter­day it had ap­pointed Craig Bell as chief fi­nan­cial of­fi­cer. Bell pre­vi­ously worked in New Zealand, Bri­tain, Costa Rica, Hong Kong and Saudi Ara­bia, Al-Hi­lal said. Ac­cord­ing to his LinkedIn pro­file, his pre­vi­ous post was chief fi­nan­cial of­fi­cer at Saudi Bri­tish Bank.

TRIPOLI: Head of the Pres­i­den­tial Coun­cil, Fayez Al-Ser­raj meets with the Gov­er­nor of the Cen­tral Bank if Libya, AlSad­diq Al-Kabeer to dis­cuss a so­lu­tion to the acute cash cri­sis in the coun­try.

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