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GNA set to Meet With Libya’s Central Bank in Rome to Discuss Libya’s Failing Economy

(Author: Libyan Gazette Editorial Staff)

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Ismail Zitouny/Reuters

A meeting between UN-backed Government of National Accord (GNA) and the Libyan Central Bank is expected to take place on Thursday in Rome. The purpose of the meeting is to go over the details of an agreement intended to resurrect Libya’s economy.

The meeting, which is organized by a US-led initiative, comes after the World Bank released a report expressing grave concerns regarding the state of Libya’s economy.

A five year long civil conflict has left the country with a deteriorating economy, political instability and weakened security. Only recently was Libya able to export oil, which makes up 95 percent of its revenue, from major oil ports. A couple of months into production, Libya has only managed to reach of a fifth of its potential volume of oil exports. Since 2013, Libya has lost $68 billion because of the set-back in oil production.

According to the GNA, the only way to resolve Libya’s economic weakness is to withdraw wealth from the Central Bank’s reserves. The Libyan government has been under pressure to resolve the tension in Libya caused by salaries not being paid and people’s lack of financial ability to provide for their families. Banks have had to limit the amount of cash each person is able to withdraw due to low cash availability.

“People are certainly feeling the pressure of the economic crisis. The country’s finances have eroded significantly and if the current political turmoil is not solved then Libya’s reserves will run out,” said Mohamed Eljarh, a political analyst for US-based Atlantic Council think-tank.

“Even those who do have money are only permitted to withdraw a certain amount of cash,” Eljarh said, speaking to Al-Jazeera from Tripoli.

International Crisis Group’s senior analyst on Libya Claudia Gazzini said that  Libya’s central bank lost more than $100bn to $40bn since 2013 from the foreign currency reserves. “This is impacting the Central Bank’s ability to access the reserves,” explains Gazzini.

Earlier this month, another meeting of this kind was organized in London by the US and Italy in order to work out a deal to allow the Libyan government’s Presidential Council (PC) access to $6 billion from the Central Bank. The deal specified that the funds will be invested in oil production and exports, paying salaries and strengthening electricity infrastructures, in addition to other things.

The Libyan Government has been struggling to establish full authority over Libya since arriving in Tripoli in March. The GNA was a byproduct of a Libyan political agreement that was signed in Morocco in December 2015. Since its establishment, the GNA has been opposed by some members of the parliament, which used to be based in Tripoli but due to escalating violence in 2014 was forced to move to Tobruk.

According to Eljarh, the Libyan parliament’s lack of support for the GNA means it cannot legally provide the Libyan government with funds under Libyan law. “The PC has no budget because the GNA is not endorsed. The House of Representatives did not introduce or approve a budget,” he said.

“What they are trying to do now has never existed in Libya before. They are trying to bypass Libyan law to offer the PC an emergency budget to operate.”

Libya’s western region has been the only region that supported and trusted the GNA with unifying the country. However, with an out of control civil conflict between various factions in Libya in an environment of widespread lawlessness, some Libyans are skeptical of any promises to resolve Libya’s weakened state.  

“There has been no political solution since 2014 and it only gets worse. Instead of having a united political body, we have ended up with three governments,” Nadia Ramadan, a Tripoli-based market researcher. “All we need is for the country to regain stability, to have one government.”

“They [Western governments] cannot keep insisting on the GNA and the PC. The agreement for the GNA was signed a year ago and they have no power or influence on the ground,” said Eljarh. “They get them to meet in capitals all over the world and sign papers, but the GNA is not the one calling the shots. The only recognition they have is outside Libya, when they meet with world leaders.”

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