Libya’s acute cash crisis is set to get worse and its banking system requires a complete overhaul that will be guided by the International Monetary Fund and World Bank, the central bank’s recently appointed governor said. Saddek Omar Elkaber, head of the central bank, said just $1.5 billion out of around $170 billion of Libyan assets abroad had been unfrozen, and with the first delivery of the war-torn country’s new banknotes still nearly two months away, the liquidity crisis was far from over. “The first shipment will arrive at the end of December… We are going to have to manage the liquidity problem until then,” Elkaber said. Reform of Libya’s banking system should be guided by a roadmap assembled by international bodies including the IMF, the new governor said, but for now the central bank’s priority was coping with the banknote shortage.
Wage increases, medication and reconstruction are putting a further strain on the very limited cash supply, and queues outside banks have grown longer this week ahead of the greater Eid festival of sacrifice, when families traditionally buy a sheep for slaughter at a cost of around 500 Libyan dinars ($410). A lack of cash as well as a shortage of animals has caused prices to rise by several hundred dinar, compounding the problem. Despite a UN resolution scrapping sanctions following the death of ousted leader Muammar Gaddafi, the process of unfreezing Libyan assets is lengthy because the money is spread out across many countries with different regulations.
“The promises have been made for the media,” Elkaber said.
Libya central bank looks to IMF amid cash crisis
