Central Bank officials in the capital Tripoli, have agreed to reform process which includes a proposal to impose mandatory commission on all transactions in foreign currency. Giving no details on how the fees would work but explained it would be aimed at bridging the official exchange gap of 1.4 dinars to the US dollar, and a parallel rate of about 7 dinars.
The gap is considered a contributing factor to the liquidity crisis by distorting the country’s oil-dependent economy. With black market scams flourishing as though with easy access to dollars at official rate are profiting heavily in imports.
Once one of the wealthiest nations in the north African region, Libya’s economy has been crippling in the five years of political division and conflicts.
The Saturday announcement by the central bank was agreed with the head of the economic file head, Fathi al-Majbari, of the internationally recognized Tripoli-based government.
Other tracks to the reforms are aimed at addressing subsidies as well as create a mechanism to compensate and ”mitigate the repercussions and effects of economic reform”.
After an internationally mediated summit in Tunis last week, the central bank’s statement was to put a cap on the governor’s agreement focusing on the exchange rate and reduction of fuel subsidies before the end of July.
Libyan officials with knowledge of the Tunis meeting say the compensation mechanism is in the form of cash influx to help reduce the country’s fuel subsidies. Even with the political unrest, is among one of the world’s generous and has led to widespread smuggling of fuel.
To what extend Tripoli officials could implement these economic reforms remain to be seen, without the backing of eastern factions which support the parallel government and the central bank.
In the recent past, pledges to act on the exchange rate and subsidies have not been able to implement.
BaretaNews Foreign Correspondent/Analyst