CBL devalues dinar by 13.3% against foreign currencies

The Central Bank of Libya has announced a 13.3% devaluation of the dinar against foreign currencies, setting the new exchange rate at 5.56 Libyan dinars to the US dollar.

In addition to the devaluation, the Central Bank has reduced the annual foreign currency allocation for personal purposes from $4,000 to $2,000. Students seeking to study abroad will be limited to $7,500, whilst those requiring medical treatment outside Libya will be entitled to a maximum of $10,000.

In a statement released today, the Central Bank explained that these measures aim to create economic balance amid the challenges posed by the lack of unified spending between Libya’s two rival governments.

The bank stated that the policy changes are designed to achieve financial sustainability, stabilise prices, ensure banking system integrity, and protect foreign exchange reserves.

Officials called on judicial authorities and the Ministry of Interior to implement deterrent measures against the smuggling of goods and fuel to neighbouring countries, and to combat black market currency speculation.

The Central Bank revealed that expanded public spending has worsened the public debt crisis, with combined liabilities at the Central Banks in Tripoli and Benghazi now reaching approximately 270 billion dinars. Of this total, 84 billion dinars are held by the Tripoli-based bank, while 186 billion dinars are held by its Benghazi counterpart.

Without a unified budget and if current spending patterns continue, public debt is projected to exceed 330 billion dinars by the end of 2025.

The bank disclosed that public spending in 2024 amounted to 224 billion dinars, generating demand for foreign currency worth $36 billion. The unity government spent 123 billion dinars, while the parliament-appointed government spent 59 billion dinars.

According to the Central Bank, this dual government spending has created an imbalance between foreign currency supply and demand, undermining exchange rate stability. The expansion in public spending over recent years has caused the money supply to surge beyond 178 billion dinars.

The bank warned that continuing current spending practices would further deteriorate Libya’s financial and economic situation, potentially leading to a loss of confidence in the local currency as demand for foreign currency rises and pressure on the parallel market exchange rate intensifies.​​​​​​​​​​​​​​​​