Libya’s cash shortage crisis to end by early 2019, official says

The deputy head of the Presidential Council, Ahmed Meiteeg, Libya expects to end a long-running liquidity crisis by early 2019 as a foreign currency tax helps the official and black market exchange rates converge at less than 3 dinars to the dollar.

Asked when the liquidity situation in the banks would be normalized, Ahmed Maiteeq told Reuters: “By the beginning of February, beginning of next year, it will be part of the past.”

Once the rates converge and the supply of dinars and dollars is freed up, Libya will begin reducing fuel subsidies that cost the state up to $5 billion last year and have led to rampant smuggling to neighboring countries, Maiteeq said.

He also said state oil firm NOC, which has struggled to maintain oil fields amid funding shortages and blockages by armed groups, would get a development budget of $1.8 billion in 2019, as the wheels of the economy start turning with the flow of dollars. Other development projects would also be restarted.

Between 2014 and 2017, the dinar fell by as much as 600 percent on the parallel black market, which has become the widely used benchmark, as oil production see-sawed and trust in the banking system collapsed.

The official rate, used only by some state companies, has remained at 1.4 dinars.

To bridge the gap, the Presidential Council in Tripoli slapped a 183 percent tax on commercial and private hard currency deals in September, bringing the effective official rate for such transactions to 3.9 dinars.