Amidst the persistent financial difficulties and institutional division plaguing the country, the Central Bank of Libya’s decision to devalue the Libyan Dinar against the US dollar by 13.3%, effective April 6, 2025, has arrived. This decision has acted as an earthquake, shaking the economic and political landscape of the nation and igniting widespread angry reactions.
The Presidential council..Financial Imbalance Cannot Be Rectified by Devaluation
Responding to the Central Bank’s decision, the Presidential Council stated that the financial imbalance stemming from the absence of a unified state budget and the multiplicity of public spending entities cannot be rectified by devaluing the national currency. The Council asserted in its statement that this devaluation will not decrease demand for hard currency, as the Central Bank of Libya hopes.
On the contrary, it is expected to increase demand for currencies due to the direct impact of this measure on increased government spending in the subsequent fiscal year. The Presidential Council reiterated its urgent call in its statement for Libyan parties to reach a consensus during this difficult transitional phase, particularly the House of Representatives and the High Council of State, on a unified public budget law and to end the state of duplication in public spending.
The Presidential Council clarified that should there be further delays in achieving this, it calls upon all concerned parties to reactivate the Supreme Financial Committee, considering it a temporary consensual financial framework resulting from a serious national dialogue endorsed by international resolutions, notably those of the Security Council, to curb the continuous deterioration in the country’s financial and monetary condition.
The High Council of State..The Central Bank’s Monetary Policy Threatens a Catastrophic Crisis
For his part, the President of the High Council of State, Khaled al-Meshri, affirmed that the Central Bank’s decision to devalue the Libyan Dinar is akin to misguided treatments far removed from sound economic logic. He stated that it casts a shadow over the living conditions of Libyans and threatens a catastrophic crisis. In a statement regarding the Central Bank’s report, the High Council of State called upon the influential actors, particularly the Central Bank of Libya, to adopt more balanced and cautious policies regarding this sensitive file, considering it a key factor affecting the present and future of citizens in Libya. The Council stated that the real problem lies in the political division and the fragmentation of sovereign institutions and governments, and that the Council has understood from the outset that the issue is not about changing the governor or the board of directors of the Central Bank.
The High Council of State’s statement also emphasized the necessity of focusing on reducing government spending and adopting a unified budget that minimizes the squandering of public funds. The statement clarified that the radical and final solution to these escalating problems lies in the formation of a unified government
Dabaibah’s Government Accuses Hammad’s Government of Draining Cash Reserves
In a statement responding to the Central Bank’s decision, the Government of National Unity (GNU) stated that the volume of spending by the Libyan government headed by Osama Hammad, which occurred outside the official financial arrangements during 2024, amounted to 59 billion Dinars. The GNU pointed out that this figure is five times the amount allocated for public development in the budget, which did not exceed 12 billion Dinars. The GNU also affirmed that the parallel spending took place without reference to state institutions and their regulatory bodies, leading to repercussions on the national economy, manifested in the depletion of cash reserves, a rise in public debt, the decline in the value of the Libyan Dinar, alongside a significant increase in prices.
In its statement, the government published details of official spending, which is estimated at around 12.302 billion Dinars, distributed across the budget’s chapters: the first chapter 67.6 billion Dinars allocated to salaris, the second chapter 7.7 billion Dinars for operational expenses, the third chapter 12 billion Dinars for development, the fourth chapter 16.1 billion Dinars for subsidies, and the exceptional budget for central projects, amounting to 9.8 billion Dinars.
The government stated that, while presenting these facts to the Libyan people, it reiterates its call for the unification of financial institutions and for working under the umbrella of the state to ensure transparency and fairness in the distribution of resources and to protect the country’s economic stability, emphasizing that official spending is carried out for the benefit of all Libyan citizens and includes all regions without exception.
In response, the Libyan government, headed by Osama Hammad, issued an official statement reacting to the statements of the GNU and the Governor of the Central Bank. The statement, a copy of which was obtained by “Al-Manassa,” aimed to refute what it described as “misrepresentations” from the two other parties. The government affirmed its full commitment to the applicable laws, foremost of which are Laws No. (9) and (11) of 2024 concerning the general and supplementary budgets, as well as development laws and the emergency budget.
The statement accused the GNU of “full responsibility” for the economic deterioration the country is witnessing, pointing out that the “storming of the Central Bank of Libya’s headquarters last year by armed groups” was aimed at enabling an illegitimate group to manage the bank, which negatively affected the financial institution’s international reputation and weakened its credit rating. The statement revealed that the outgoing government spent more than 500 billion Dinars without legal basis, and also encroached upon the profits of the Central Bank and the fees from the sale of foreign currency, which exceeded 21.2 billion Dinars, in addition to allocating 12 billion Dinars for projects it described as “fictitious development.” The statement pointed to other violations related to the oil swap process, which continued despite the expiry of the legal deadline in September 2024, as well as the arbitrary spending of what it called “exceptional budgets” for the National Oil Corporation and the General Electricity Company, amounting to 69 billion Dinars during the years 2022 and 2023. The government directed sharp criticism at the Central Bank’s decision to devalue the Dinar, considering that it did not sufficiently study its impact on citizens’ livelihoods and described it as an attempt to evade responsibility for the economic crisis.
In conclusion, the Libyan government affirmed its commitment to unifying spending and transparency, calling on all parties to adhere to the principles of good governance and warning against the consequences of continuing to spend outside the general budget.
Call for an Emergency Parliamentary Session Regarding the Central Bank’s Decision
In response to the Central Bank’s decision, 69 members of the House of Representatives called on the Speaker of the House, Counselor Aguila Saleh, to convene an urgent session regarding the Central Bank’s decision, which they described as alarming concerning the financial deficit, the significant expansion in the expenditures of the two governments outside the budget framework, and other data requiring review by the House of Representatives and taking appropriate measures.
In a statement on Monday, the members also urged Counselor Saleh to invite the Governor of the Central Bank of Libya to attend a hearing on Monday and Tuesday, April 14 and 15.
The Joint Communication Committee of the House of Representatives and the High Council of State also issued a strongly worded statement following the recent data released by the Central Bank of Libya, which revealed a serious deterioration in the country’s financial situation, with a shocking rise in domestic public debt and an unjustified increase in spending rates. In its statement, the committee expressed its deep concern regarding these alarming developments, noting that this deterioration was expected given the continued political division.
The statement mentioned that previous meetings between the two councils in Tunisia, Morocco, and Egypt aimed to form a unified government capable of addressing these crises in their early stages. The committee also directed sharp criticism at the Central Bank, accusing it of failing to implement firm monetary policies and not responding to early warnings of this crisis. The statement affirmed that the Libyan roadmap resulting from previous joint meetings between the two councils, which has received broad international support, remains the optimal solution to the current crisis.
The committee warned that the continuation of governmental division and the delay in forming a unified executive authority will lead to a worsening of the financial crisis, with accompanying threats to national security and the stability of the ceasefire. It also stressed the need to stop any spending outside the legal and regulatory framework.
In conclusion, the committee called on all parties to unite around national solutions and reject any attempts to deplete the country’s resources, while emphasizing the importance of accelerating the achievement of political consensus that paves the way for general elections. Regarding the recent decision to devalue the Dinar, observers stated that it will negatively impact the living conditions of the Libyan citizens, especially in the absence of a clear production policy.
