CBL fighting to keep the economy solvent

Dual spending by both the Government of National Unity (GNU) in Tripoli and the Government of National Stability (GNS) in Benghazi is outpacing the revenue generated through Libya’s oil sector, the Libyan state's main source of funding.

Issa is working to address the country's economic challenges, including the removal of counterfeit currency, resolving liquidity issues, and combating the parallel market. However, he has been unable to convince either the GNU or GNS to reduce their spending, which is the main driver of the country's increasingly unstable budget deficit.

Despite continued public calls from the Central Bank of Libya (CBL) for fiscal responsibility, both the GNU and GNS show no signs of compromise, with both governments recently increasing their spending.

A closer look

Over the past few months, CBL Governor Naji Issa has attempted to address multiple weaknesses in the Libyan economy. One of its principal issues is monetary, primarily the prevalence of counterfeit 50 dinar notes and a lack of liquidity in commercial banks.

For the past few years, Libya’s economy has suffered from a glut of counterfeit 50 dinar bills, which have often been used for smuggling and other illicit transactions. Issa had already launched programs to remove as many of these bills from circulation as possible. These efforts have had only limited success, and with increasing pressure to take action, the CBL announced that it would invalidate the 50 dinar bill as legal tender in September.