The Ministry of Economy and Trade of the Government of National Unity issued a statement on the decisions issued at the first meeting of the Board of Directors of the Central Bank of Libya.
The Ministry’s statement said: “The Ministry of Economy and Trade followed with great interest the decisions issued at the first meeting of the Board of Directors of the Central Bank of Libya, which the Ministry believes will have a positive impact on the economic situation and the business environment.”
The statement added: “With the Board of Directors of the Central Bank of Libya beginning to activate unused monetary tools, thus exercising its natural role in implementing all monetary policies, instead of focusing only on the exchange rate, with the aim of redirecting economic activities in the direction of influencing consumer and saver behavior to support the economy, and in a manner that “It reduces the economic effects of neglecting these tools for several years.”
- A banking system was established that is not subject to the supervision of the monetary authority, represented by companies, exchange offices, and money transfers, the size of which is estimated at approximately (40%) of the deposits of individuals and companies in the official banking system and approximately (35%) of the official imports, and the majority of export operations take place through it. 2 Commercial banks finance individuals and companies based on a credit policy approved in 2010 AD (at a rate of 70% of deposit liabilities) without any distinction of the type of deposit or the presence of investment accounts against it.
The statement added: “With the issuance of the decisions of the Board of Directors of the Central Bank of Libya regarding the following:
1. Approving the activity of exchange companies and offices.
2 Approval of the draft absolute Mudaraba deposit certificates.
3 Activate investment accounts.
4. Adopting the regulations governing financial leasing.”
The statement said: “We believe that these decisions represent fundamental economic reforms that address a number of problems related to the country’s financial economy, as a result of which the country has suffered over the past decade.”
He added: “As the decisions taken begin to take effect, they will have a positive impact on solving a number of problems, most notably the following:
- The beginning of the real solution to the movement of currency migration from commercial banks, which began to appear since the month (6) of the year 2015 AD.
- Reducing the previous financing effects associated with the credit policy adopted since 2010 AD, which did not distinguish between the type of deposits, and was (70%) of the deposit liabilities of commercial banks.
- Introducing a leasing financing tool to provide a credit climate for investment assets instead of turning to consumer goods in light of the continued closure of the real estate registry, which supports economic diversification.
- Supporting the state’s national accounts, with the entry of transactions of exchange companies and offices into the formal economy.
The statement continued: “The Ministry of Economy and Trade believes that all the decisions referred to are decisions that support the national economy, preserve the purchasing power of the dinar, and enhance its strength against the basket of currencies associated with it, and therefore they contribute directly to the stability of the general level of prices, and they will also limit operations.” Speculation in the Libyan market affects directing the behavior of individuals and companies to achieve the public interest and the interest of the individual through official transactions subject to the supervision of the competent authorities in accordance with the applicable laws and legislation.”
The statement added: “The Ministry looks forward to working and coordinating between the relevant institutions to create harmony between the components of the comprehensive economic policy (monetary - commercial finance), which will be the cornerstone of the country’s macroeconomic stability.”
A few days ago, the Board of Directors of the Central Bank of Libya held its first meeting, today, Saturday
in Tripoli, in the presence of all members, after the Council meetings stopped for more than 10 years.
Last updated: November 12, 2024 – 19:17
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Interview between Time.news Editor and Dr. Ahmed El-Maati, Economic Expert on the Recent Developments in Libya’s Central Bank
Editor: Good afternoon, Dr. El-Maati, and thank you for joining us today. There’s a lot of excitement surrounding the recent first meeting of the Board of Directors of the Central Bank of Libya. Can you provide us an overview of the decisions made and their significance for the Libyan economy?
Dr. El-Maati: Good afternoon, and thank you for having me. Yes, the meeting indeed marks a pivotal moment for the Central Bank of Libya. The Board has approved several key initiatives aimed at revitalizing the financial system and addressing long-standing economic issues. These include activating unused monetary tools, approving activities for exchange companies, and introducing Mudaraba deposit certificates, which are significant for enhancing investment strategies.
Editor: That’s interesting, especially considering the context in which these decisions are being made. The Ministry of Economy and Trade mentioned that these reforms could positively alter the economic landscape and business environment in Libya. How do you see this unfolding in the near future?
Dr. El-Maati: The anticipated reforms will likely begin to address many systemic issues that have plagued Libya’s economy, particularly the migration of currency from commercial banks, which has been a challenge since 2015. By reintroducing robust financial regulations and support systems, we could see an influx of capital back into the formal banking sector, which would strengthen financial stability.
Editor: One of the key points made was the activation of financial leasing and the introduction of investment accounts. How do you think these initiatives will influence the entrepreneurial landscape in Libya?
Dr. El-Maati: Introducing financial leasing is a game-changer. It provides businesses with alternative financing options, which is crucial given the current constraints in the real estate market. This move allows entrepreneurs to invest in assets rather than spending on consumer goods, thus promoting economic diversification. Additionally, the activation of investment accounts encourages saving and stimulates consumer confidence, creating a more conducive environment for business growth.
Editor: The Central Bank’s decisions have been positioned as fundamental economic reforms. What specific problems do these reforms aim to solve, and how will they impact ordinary Libyans?
Dr. El-Maati: The reforms address several critical issues, such as the previous credit policy that did not differentiate deposit types, which inhibited proper risk management in banks. They also aim to prevent speculation in the market by reinforcing the purchasing power of the dinar through formal channels. For ordinary Libyans, this means potentially greater financial stability and better access to banking services, which could lead to improved living standards over time.
Editor: The statement from the Ministry emphasized the need for coordination among institutions to harmonize economic policies. How crucial is this collaboration for the success of these reforms?
Dr. El-Maati: Coordination among institutions is imperative for implementing these reforms effectively. Comprehensive economic stability cannot be achieved in isolation; it requires collaboration between monetary, commercial, and financial policies. Such synergy will ensure that all components of the economy work together toward common goals, ultimately fostering a robust and resilient economic framework.
Editor: Looking forward, what are the major challenges you foresee in implementing these reforms, and how can they be mitigated?
Dr. El-Maati: One major challenge is the persistent issue of political instability in Libya, which can influence confidence in economic reforms. To mitigate this, transparent communication from the Central Bank and the government is essential to build trust. Additionally, training and capacity building for banking personnel and financial institutions will be necessary to smoothly transition into this new framework.
Editor: Thank you for your insights, Dr. El-Maati. It’s clear that the decisions made by the Central Bank have the potential to significantly reshape Libya’s economic landscape. We look forward to seeing how these reforms unfold in the coming months.
Dr. El-Maati: Thank you for having me. I share your optimism, and I hope to see a stronger and more resilient Libyan economy.