Economists fear a depletion of foreign exchange reserves in Libya as a result of high rates of government spending and increased demand for foreign currency, as market demand reached $24.5 billion last year , with a deficit of $1.6 billion which was covered by foreign exchange reserves to maintain exchange rate stability.
Rising oil prices on the world market are helping to boost Libya’s Central Bank revenue by billions of dollars, but economists have estimated that falling reserves coupled with expanding hedging spending could drive the Central Bank to make an additional drop in the price of the local currency, the board of directors of the Central Bank of Libya having previously fixed a unified exchange rate in the country at 4.48 dinars for one dollar, instead of l old price of 1.4 dinars, a 70% devaluation of the currency.
In a statement to the Al-Araby website, financial analyst Abdel Nasser Al-Shaibani estimated that there are positive indicators in the Libyan monetary cycle in terms of development projects accounting for 27% of last year’s spending, with the unification of public expenditure through a government, because the modification of the exchange rate has given satisfactory results.
It should be noted that Libya’s reserves began to decline 10 years ago, as they stood at $134 billion in 2010. The Central Bank of Libya said that total expenditure during the last year amounted to 85.8 billion dinars, which is lower than the credits allocated, estimated at 86.1 billion dinars.