São Paulo – The Central Bank of Libya is making efforts to facilitate access to foreign exchange in the country and alleviate the shortage of the local currency, according to an analysis of the Libyan economy by the International Monetary Fund (IMF). The fund released a statement after a staff team led by Dmitry Gershenson visited Tunis, Tunisia, from December 2 to 6 to discuss Libya’s latest economic developments.
In its report, the IMF highlights that the Central Bank of Libya has reduced the foreign exchange tax from 27% to 15%, raised limits on letters of credit and on allowances for personal use, and taken steps to regulate activities of foreign exchange bureaus. As a result of these initiatives, the gap between the official (plus tax) and parallel exchange rates has decreased from 13% in July to 8% in November.
The Central Bank of Libya is also addressing local currency shortages through injecting liquidity into the banking system and expanding electronic payment services. Additionally, the banking sector has been raising capital in line with the central bank’s guidelines. The IMF reports that its staff discussed with authorities the importance of developing monetary policy tools which would help the central bank safeguard the efficient functioning of the foreign exchange market.
According to the IMF, following the disruption in oil production in August and September, projected GDP growth and the fiscal and external balances for 2024 have been revised down. By the same token, the GDP growth forecast for 2025 has been revised up to reflect the expected rebound in oil production. The estimates, however, are subject to risks from geopolitical tensions and potential changes in the oil market.
Libya’s 2025 budget
The IMF analysis points to controlling fiscal expenditure as the preferred policy approach consistent with Libya’s current macroeconomic framework. The institution emphasizes that it is critical for the authorities to agree on spending priorities through an approved unified budget for 2025. Such a budget would, among other benefits, help improve the management of the country’s resources.
