The Minister of Finance in the Government of National Accord, Faraj Boumtari, confirmed in an interview with Al Jazeera Net that military spending in eastern Libya is unknown, and said that there is a very large amount of money being smuggled out of Libya.
What did he say about losses, wealth distribution, and other issues?
This is the text of the interview:
How was Libya affected financially in the war on Tripoli?
We noticed that some countries after the First and Second World War, such as Rwanda, South Africa and others, had a positive reflection of the war on the growth and development of industry.
In Libya, the experience is reversed, as there has been great damage to the infrastructure, migration of capital and the smuggling of large sums of money from Libya since the events of the Libyan revolution in 2011.
What is the size of the losses suffered by Libya since the fall of the Gaddafi regime?
The losses are different, for example, at the level of infrastructure, for example, there were no estimates from successive governments, and with regard to the private sector and citizens' property, there was an attempt to assess the damage, and not all financial damages were officially counted, and the losses from the oil shutdown are now estimated at about $ 130 billion.
Unofficial estimates confirm that between 100 and 200 billion dollars is the total losses incurred by Libya, including losses in the infrastructure, the private sector, and citizens' property.
Data were issued by Libyan parties regarding the division of wealth and resources, what does he mean by that?
The current problematic is the term distribution of wealth and resources, unfortunately this term was misinterpreted and misused, and we tried to clarify locally and internationally that the intention is not to divide resources and wealth, but rather to provide citizen protests anywhere, and this is what the Government of National Accord is doing, as its general budget now covers the entire Libyan territory This includes salaries, services, management budgets, fuel subsidies, medicines, etc.
There is a slight gap between what the reconciliation government financially covers and what is covered in the eastern region, and this is trying to create rapprochement in it through a joint committee sponsored by the World Bank and the International Monetary Fund, which tries to unify and fill any gaps in government spending.
Who commissioned this committee?
What are its tasks?
It is an old committee that was formed years ago under the auspices of the United Nations, and it tracks government spending between the Western and Eastern regions, and we have taken good steps in this direction over the past years to unify government spending, especially in Chapter One of the general budget.
This process is continuing, and its reflection will be positive, especially in the oil file and the acceptance of imposing a natural context in the collection of financial revenues to be spent in the general budget on all Libyan soil.
Boumtari confirmed that the losses from the oil shutdown are now estimated at about 130 billion dollars (Al-Jazeera)
How much is the military spending of the Government of National Accord and Haftar's forces?
Our military spending in the Government of National Accord is specified in the state’s general budget approved in 2020, and most of the military spending is on salaries. Other than that, there are no large financial values allocated to defense operations because all the equipment and supplies are available to the Ministry of Defense.
As for the eastern region, we do not have accurate data on military spending, its chapters, the disbursement mechanism, and its classifications.
Who is responsible for monitoring the financial market in Libya?
This old and new problem, when the Al-Wefaq government approved economic reforms in 2018, among the items of economic reforms was activating the role of the Central Bank of Libya in controlling foreign exchange to end the parallel market and control foreign exchange circulation, and this role is still absent.
The money market, with its banking tools and exchange offices, is ineffective and unattended, and this problem that we suffer is the responsibility of the Central Bank of Libya, which must activate the monitoring tools.
What is the reason for the growth of the phenomenon of financial corruption in Libya?
The reason for corruption is the availability of a parallel market and the ease of transferring money because any public employee in any public entity can easily smuggle money into the parallel market.
For example, last year, more than $ 10 billion were available in the parallel market, including grants to household heads and the financial values granted in personal transfers, and this is the main reason for the growth of the phenomenon of corruption.
I had previous sessions with the Attorney General's office, and I submitted all documents and backgrounds, with their accurate details, to the investigation authorities.
Do you have information about the size of bank credits granted to merchants?
It is not possible to predict the exact figures due to the absence of coordination and tight control systems, but we confirm that between 50% and 60% of commercial activity takes place outside the banking system, and this is a dangerous indicator indicating that there is a very large amount of money being smuggled out of Libya.
Work is underway with the Customs Authority to adopt an advanced system for early warning and to provide data, details and financial values of goods imported to Libya to assess the situation and the sums that are smuggled outside the banking system.
How much is the public debt of the Libyan state abroad?
I do not think that there are large financial debts abroad on Libya, and most of the government debts are domestic debts, whether those of the Central Bank of Libya or obligations on the public treasury, some of them are limited and the other part needs evaluation and classification to be recognized within the public debt.
Boumtari stressed the need to activate the role of the Central Bank of Libya in controlling foreign exchange to end the parallel market (Al-Jazeera)
How does the Ministry of Finance monitor financial outlets and commercial movement in eastern Libya?
To whom do the tax money go?
The movement of ports, customs and taxes is one of the unified public institutions that receive its instructions from the General Administration in Tripoli, and the monitoring process is carried out periodically, and reports are received periodically, and there are no problems for these institutions.
Smuggling of cars, money and fuel from Libya has become an open trade .. Who benefits from these illegal actions?
It is difficult to assess the informal market because smuggling operations arise as a result of the difference in the exchange rate between a country and neighboring countries. We find this clearer in fuel smuggling, which is one of the highest profit margins in Libya, which leads to the depletion of our foreign exchange resources and the increasing suffering of citizens in fuel. Others that are smuggled have damages to the Libyan state and indicate a defect in the monetary policy and the exchange rate and a depletion of the state's resources.
There are foreign investments in countries that are considered hostile to the reconciliation government. Will Libya benefit from these investments and move its money?
It is no secret to anyone that there is a freeze on Libya's foreign investments, and there is a difficulty in moving investment funds and their location, and we are now working on evaluating our foreign investments to reposition these investments when the freeze is lifted.
Libya has been severely affected by the depletion of foreign investment funds, their freezing and their bad use in some countries, and in the event of appropriate political conditions, those who caused damage to the Libyan investment funds will be held accountable.
What are the projects that the Government of National Accord contracted with Turkey to complete in Libya recently?
The Libyan-Turkish relations are distinguished, and most of the recently signed projects are related to electricity projects, as Turkish companies have proven their worth in Turkey and abroad to implement the largest projects, and we have tried over the past period to benefit from the experiences of Turkish companies to attract them to Libya to implement the projects of the General Electricity Company as a priority for the government.
Undoubtedly, the priority now is to complete the projects whose contracts were signed between the years 2007 and 2010, which are estimated at about 160 billion dinars (the dollar equals 1.36 dinars), the share of Turkish companies of which is about 20 billion dinars, and the focus is on completing projects that affect the life of the Libyan citizen.
In addition to that, a joint committee was formed in the past to settle outstanding matters with Turkish companies and resulted in the signing of a memorandum of understanding headed by the Minister of Planning in the Government of National Accord and the Minister of Trade in the Turkish government, and work is underway to activate the role of these companies to return to work in Libya.
Libya spends from 3 to 4 billion dollars annually to support fuels (Al-Jazeera)
Who are the countries that cooperated with the reconciliation government and the others that obstructed the government's work?
The Government of National Accord financed entirely from oil money, and even when pumping oil stopped, it was self-financing from foreign exchange, and the Libyan state had sufficient financial resources to cover the needs and did not suffer from difficult financial conditions.
Politically, perhaps it is clear that among the countries that support Libya the most is the state of Turkey and some other countries that have sided with the government based on direct bilateral relations or through the United Nations.
What is your vision for the state's public finances in the future?
The financial situation in the country is good, but it is important in the future to focus on introducing a modern system of government spending, restructuring the general budget and supporting the production of the National Oil Corporation to enhance the most important financial revenue tools.
What we are looking for is the diversification of government income for Libya after its suffering in relying on the only source of income, which is oil, and the need to think about sources and implement the necessary legislative changes, because tax income constitutes only 2% and income from customs does not constitute more than 0.5%, all of these matters need To correct and revitalize the economic situation, support the private sector, and then activate collection tools.
Did the reconciliation government have an opportunity to diversify sources of income instead of relying on oil?
The Government of National Accord has adjusted the exchange rate through the economic reforms project. From the first year, we achieved surpluses in the state budget in 2018 and 2019, whether in foreign exchange fee or oil revenues, and it was supposed to be followed by a step to remove fuel subsidies that drain the largest value of hard currency in government spending Libya spends 3 to 4 billion dollars annually to support fuel.
During the last period, the Government of National Accord rationalized government spending and saved about $ 3.5 billion in Chapter 1 alone in the general budget for the first time in 10 years, but there are legislative steps that can only be started after revitalizing and developing the economic situation to activate collection tools and participation between the public and private sectors.
How much does Libya need for reconstruction and construction?
The positive thing is that there are many contracts concluded years ago in infrastructure, housing and services projects, and their completion speeds up the process of reconstruction.
We have submitted a proposal to the Ministry of Finance to establish a fund for reconstruction and reparation as a result of previous wars, and we are trying to create self-resources for this fund to cover its needs.