A surprising decision by the Central Bank to close the system for selling foreign exchange for personal purposes amid the continuing rise in the exchange rate in the parallel market and repeated citizens’ complaints about the mechanism for obtaining their foreign currency allocations, which opens the door to questions about the reasons and repercussions of this decision on the economy and the citizen.
System shutdown The Central Bank announced through the registration window for the system of selling foreign exchange for personal purposes, The system will be closed until March 31, indicating that the quota allocated to all commercial banks for the month of March has been reserved.
Humiliation of citizens Member of the Finance Committee of the Supreme Council of State, Ali Al-Suwaih, said in a statement to Al-Raed that closing the system is a humiliation for citizens, adding that the problem lies in who controls the foreign exchange reservation system.
Tampering and manipulation As for the banking and economic expert, Ibrahim Al-Haddad, he considered the closure of the system absurd and a manipulation of citizens’ feelings, indicating in a statement to Al-Raed that it would exacerbate the severity of the economic and monetary crisis in the country, increase the price of the dollar, and generate fears among merchants and citizens.
good decision Meanwhile, Mukhtar Al-Jadid, professor of economics at the University of Misrata, believes that the decision to close the reservation system at the Central Bank until the end of March is good, in two respects.
He explained, according to his Facebook page, that the first aspect is that there is an improvement in the system’s performance to the point that the allocations for the month of March were exhausted in three days, while the second is that what was reserved exceeds half a billion dollars, and this value will enter the parallel market in the coming days in succession and have a positive impact. On the exchange rate.
Increase spending
The unexpected closure of the system comes amid apparent fears of depleting foreign exchange reserves without achieving its purpose of calming the exchange rate.
On February 27, the Governor of the Central Bank of Libya, Al-Siddiq Al-Kabir, said that the government’s continued increase in the level of public spending significantly, reaching the level of 165 billion dinars in 2023, and the existence of parallel spending from unknown sources; It contributed to the increase in the volume of demand for foreign exchange despite the Central Bank increasing the volume of supply by $5 billion compared to 2022.
Counterfeit currency On the other hand, the Central Bank attributed the continued fluctuation of the dinar exchange rate to the counterfeiting of the 50-dinar currency through illegal networks working to withdraw the supply of foreign exchange and strike the Libyan dinar.
The Central Bank announced, in a letter addressed to the members of the Finance Committee of the House of Representatives, on February 25, its intention to withdraw the 50 dinar note in its various issues from circulation for fear of the high and continuing rates of counterfeiting, the widening of the scope of its circulation, and the inability of employees to distinguish it.
The Central Bank revealed the existence of three issues of 50 dinars in circulation in the markets, a denomination issued by the Central Bank in Tripoli, a second by the Benghazi centers, and a third of unknown origin.
urban roof
In a decision considered the first of its kind, the Central Bank adopted pre-determined allocations not to exceed each month of foreign exchange sales for personal purposes, which reflects its continued fear of depletion of hard currency.
Study the size of the demand
The Central Bank had referred to this procedure, in a previous message on the 20th of last February, when it announced the formation of a committee to study the volume of demand for foreign exchange and approve the banks’ requests for credits and personal items, including requests from public bodies, which necessarily means subjecting the bodies’ requests to… The government’s general foreign exchange requirement requires achieving a balance between the volume of demand and the volume of available revenues.
The Central Bank indicated at the time that the formation of the committee was based on a memorandum presented by Deputy Governor Marai Al-Barasi, headed by the Director of Banking Supervision and five members, including the accounts directors in Benghazi and Tripoli.
On February 2, the Central Bank launched a reservation platform for purchasing foreign exchange for personal purposes with a maximum value of $4,000 or its equivalent in other currencies, giving banks the authority to decide on requests to sell foreign exchange for personal purposes using the national number of every Libyan citizen of age. 18 years and above after meeting the requirements stated on the foreign currency reservation platform for personal purposes.
