(Author: Libyan Gazette Editorial Staff)
Central Bank of Libya in Bayda reveals new banknotes
A central bank, created by the eastern government, based in the city of Bayda announced on Wednesday that it would be printing new banknotes from Russia separate from the internationally recognized Central Bank in Tripoli.
The parallel Central Bank in Bayda is another rival institution, like the eastern-based National Oil Corporation (NOC), loyal to the Tobruk-based House of Representatives (HoR).
Ali Salim al-Hibri, the Bayda bank’s governor claimed to have printed 4 billion dinars worth of banknotes in Russia. In addition, the two currencies will be signed by their own bank governor, have different serial numbers, security details, and watermarks.
The Central Bank in Tripoli has long had its banknotes printed in the UK and was sent 70 million dinars, which is worth 50 million dollars, last month from a currency printing company called De La Rue.
Another one billion dinars are expected to be delivered before and during the month of Ramadan in June to the Tripoli Central Bank, which is loyal to the UN-backed Government of National Accord (GNA).
This move by the eastern bank, which will take effect on June 1, can plunge the country into an even deeper economic crisis and can jeopardize the fledgling GNA authority in Libya.
The US embassy in Libya issued a statement on its Facebook page saying that the United States and the Presidency Council “view that such banknotes would be counterfeit and could undermine confidence in Libya’s currency and the CBL’s ability to manage monetary policy to enable economic recovery.”
The economic and financial situation in Libya has been in shatters due to the ongoing political conflict since the fall of Muammar Gaddafi in 2011.
Libyan banks are facing a massive liquidity crisis with people waiting hours outside of banks to withdraw money due to their lack of trust in the banking system. It has been reported that bank deposits have fallen from 6 billion dinars in 2013 to 3 billion in 2015 due to people’s fears of depositing cash in the bank.
In addition, as Ramadan approaches, the two competing currencies, which are not interchangeable between both banks, will likely cause a rise in inflation, particularly on food, which has already reached 14% per year.
According to the Wall Street Journal, the Bayda central bank has nearly $185 million in gold and silver coins in its vault, however, it cannot access it since the Tripoli-based central bank has the combination and has refused to give it to the eastern bank.
The US embassy said that, “the United States, along with 20 other countries and four international organizations, issued a Joint Communique in Vienna on May 16 stating that Libya’s national economic institutions, including the Central Bank of Libya (CBL), National Oil Corporation (NOC), and Libyan Investment Authority (LIA), must function under the sole stewardship of the Government of National Accord (GNA).”
It is imperative that the HoR give its vote of confidence to the GNA so that Libya can move forward and become a stable and secure country under a government which aims to establish national resolve and unity.
Libya’s financial and economic challenges, lack of adequate health care services, electricity shortages, and energy problems will not improve as long as the parliament in the east and its ally General Khalifa Haftar continue in their attempts to obstruct Libya’s political transition and try to hold on to power.