Central Bank of Libya Devalues Dinar by More than 13%

The Central Bank of Libya announced devaluing the dinar against foreign currencies by 13.3%.

The bank clarified in a statement on Sunday that the value of the dinar against the US dollar has become 5.5677 dinars, adding that this decision will take effect on April 6, 2025.

The combined public expenditures for 2024 amounted to 224 billion dinars, including 123 billion dinars for the Government of National Unity's expenditures, 42 billion dinars for oil exchange, and approximately 59 billion dinars for the Libyan government's expenditures, compared to oil and tax revenues of 136 billion dinars. 

This expenditure generated a demand for foreign currency worth $36 billion.

The expansion of dual public spending over the past few years and into 2024 has led to a significant increase in the money supply, reaching 178.1 billion dinars. This could lead to several negative economic impacts and pose challenges to the bank, given the limited tools available to contain it.

Oil export revenues supplied to the Central Bank of Libya in 2024 amounted to only $18.6 billion, while foreign exchange expenditures amounted to $27 billion. This resulted in a large gap between the demand for foreign exchange and its availability, making it difficult for the Central Bank to establish a clear policy for managing the exchange rate due to the increased demand for foreign exchange and the expansion of dual public spending.

Total foreign exchange expenditures for the first quarter amounted to approximately $9.8 billion, including $4.4 billion in credits and transfers, $4.4 billion in trade cards and personal items, and $1 billion in government expenditures, equivalent to 55 billion dinars.

Oil revenues and royalties paid to the bank amounted to approximately $5.2 billion as of March 27, a deficit of approximately $4.6 billion in just three months.

The bank affirmed its full commitment to maintaining foreign assets at levels exceeding $94 billion, including $84 billion in reserves managed by the bank, despite the significant challenges and the dangerous environment in which it operates.