Accord in Libya on economic challenges
UN-backed government and central bank agree on 37bn dinar budget to meet basic needs and boost confidence
TRIPOLI // Libya’s Government of National Accord (GNA) and the central bank in Tripoli have agreed to work together to tackle urgent economic problems this year, creating a potential lifeline for the United Nations- backed administration. The government has struggled to extend its authority since arriving in Tripoli in March, hampered by its lack of control over public finances.
The GNA was created to reconcile rival governments set up in Tripoli and the east of Libya in 2014, and to end a conflict between their armed supporters. But it has faced resistance from various factions. The central bank has been reluctant to release public funding before the GNA wins endorsement from Libya’s eastern-based parliament, which it has yet to obtain.
With no hope of parliamentary approval for budgets, the GNA has been forced to seek instalments of emergency funding.
There have also been disagreements over how to tackle problems such as a liquidity crisis, inflation, a widening black- market exchange rate premium and a huge public deficit.
The GNA said on Friday that after meetings with the central bank, the audit bureau and the national oil corporation, 37 billion Libyan dinars (Dh94.5bn) of public spending had been agreed for this year. That includes 20.7bn dinars to cover public salaries and 6.3bn dinars for basic public goods and services and fuel subsidies.
“It was agreed to start taking a number of operational steps that can contribute to meeting essential and basic needs, to reduce the suffering of citizens and restore confidence in the banking sector to provide liquidity,” the central bank said on Thursday.
“The central bank of Libya hopes that this will mark the beginning of a breakthrough in the crisis, and that all parties enact the necessary measures in a timely manner, within law and with transparency.”
The GNA faces huge challenges in Tripoli, where real power is held by militias with shifting allegiances, and where the self- declared government it tried to replace has been trying to make a comeback. The GNA is also opposed by eastern power brokers allied to military commander Khalifa Haftar, who made territorial gains in eastern and central Libya last year and threatened to capture Tripoli. Breakaway branches of the central bank and the national oil corporation continue to operate in the east, although they have no control over the oil sales and revenues on which Libya is almost entirely dependent.
Oil production is still far below the 1.6 million barrels per day that Libya was producing before its uprising in 2011, but output has more than doubled to more than 600,000 bpd since September. It was expected to rise further after the lifting of a two-year blockade on major western pipelines last month.