A source in the Central Bank of Libya said that the reason for the liquidity shortage is the closure of credits (Reuters)

Libya is witnessing a shortage of liquidity in banks, which has raised concerns among citizens who are suffering due to delayed salaries and the high price of the dollar against the dinar.

As the holy month of Ramadan approaches, which usually witnesses a demand for purchases and crowding in the markets, residents of the city of Benghazi are complaining about the high prices of food commodities.

Successive crises

Reuters quoted Muhammad Al-Barghathi, a health sector employee and father of five children, as saying, “Unfortunately, until now we have not had a rest. We have gone from crisis to crisis... I am trying to get money from my bank but I have not been able to... I leave empty-handed.”

He added, "I activated banking services in order to purchase household supplies. It is true that I solved my problem temporarily, but I feel that banking services are exploiting citizens."

Only two days ago, public sector employees received their salaries for January and February.

Salah Al-Amami, a food trader in Benghazi, said, “It seems that we are back to square one in terms of liquidity. As traders, we are suffering from both a lack of liquidity and the rise in the price of the dollar. There has been a scarcity of customer demand during the past two weeks.”

The price of the dollar in the official market is 4.80 dinars, while in the parallel market (black market) it is 7.39 dinars.

The agency quoted an official source from the Central Bank of Libya in Benghazi, who asked not to be named, saying, “The reason for the liquidity shortage is the closure of credits during the last period, but we expect a breakthrough in the crisis before the month of Ramadan. Credits will be opened.”

The cause of the crisis

Libyan economist Attia Al-Sharif said, “The lack of liquidity that is occurring now is due to the intermittent and fluctuating procedures and random decisions of the Central Bank of Libya, which led to a loss of trust between the bank, citizens, and merchants.”

He added, "The citizen withdraws any amount immediately, and the merchant does not place his money in the banks, which has led to inflation. The Central Bank of Libya is headed by one person, and there is no one to hold him accountable or review him after him."

Yesterday, the Governor of the Central Bank of Libya, Al-Siddiq Al-Kabir, called for a unified national budget amid the decline in the value of the Libyan dinar.

Al-Kabeer published a message - yesterday, Tuesday - urging the authorities to end what he described as “anonymous” parallel spending in order to preserve the state’s financial sustainability.

Disagreements regarding access to the state's financial resources have often been the focus of the rivalry between factions that have plagued Libya since the revolution against the previous regime in 2011.

Al-Kabeer's demand to approve a unified budget is an indication of the political divisions in Libya, and the national unity government headed by Prime Minister Abdul Hamid Dabaiba operates in Tripoli and the west, while a parallel administration enjoys the support of Parliament in the east.

Last August, the Central Bank of Libya returned to being a unified sovereign institution, after nearly a decade of division into two branches due to the political division in the country.

Source: Reuters