As has been noted in previous issues, Libya has suffered from run-away spending that has only worsened this year. A combination of factors — the division within financial institutions; the continued and expanding conflict; a deep history of corruption; and a lack of economic diversification — all contribute to this situation.
Recent efforts in western Libya to finally confront subsidy reforms and cut back on the public sector salary bill will not curb this spending until financial institutions re-unify. Until then the eastern branches — of the central bank; Libyan Investment Authority (LIA); and the National Oil Corporation (NOC) — will all continue to prevent internationally recognised financial leaders from honestly claiming to control Libya’s macro-economy.
Despite this reality, economic reforms are continuing in the west. The motivation for such reforms is likely to be the retention of international support at a time when the east is increasingly challenging it. On 7 November the western central bank under the controversial leadership of Sadiq el-Kabir released data about all the foreign currency leaving Libya since 1 January 2019. This signalled the bank’s commitment to greater transparency in the financial sector.
According to the data, Libya spent approximately US$19.9 billion in foreign currency during the period ending on 31 October. Of this total, US$6.6 billion was directly distributed to Libyan households as foreign cash allocations. Much of the foreign currency also went toward paying for the imports upon which Libyans rely heavily for consumer goods. For example, the data suggests that so far Libya has spent approximately US$710 million on medicines this year and US US$2.5 billion on fuel imports.
The former US Special Envoy to Libya, Jonathan Winer, who led international efforts to reform and re-unify economic institutions between 2014-2017, publicly applauded the release of this data.