A diplomatic source reported to local Libyan media that Libya’s mission to the United Nations received a memo from the Chairman of the Presidential Council, Mohamed Menfi, outlining his council’s position on the appointment of the Central Bank Governor and its board, which he deemed contrary to transparency and the political agreement. According to the source, Menfi requested that the mission present the memo to the UN Security Council, but the Foreign Ministry of the Government of National Unity urged the Libyan mission to postpone this until the issue is addressed within Libya. In his memo, the Chairman reminded that recent times have seen fundamental disagreements regarding the mechanism for appointing members of the Central Bank’s board, highlighting a power struggle among institutions. This led to a round of dialogue among Libyan parties, facilitated by the UN Support Mission in Libya, resulting in an agreement stipulating that the House of Representatives should issue a decision to appoint the governor according to Article 15 of the political agreement, which requires the approval of a two-thirds majority of Parliament members in a public and transparent session. He noted that this was not achieved, as the UN mission was prevented from participating as an observer despite prior requests for their involvement.
Menfi pointed out that during the negotiation round, it was agreed to address the authority responsible for the decision regarding the appointment of the board, and consensus was reached on issuing legislation to define the senior officials in the Libyan state to ensure clarity of roles and end the power struggle concerning the board. The Chairman considered that issuing a decision to appoint the Central Bank’s board by the presidency of the House of Representatives, rather than by the House as a whole, constitutes a clear violation of the agreement and the provisions of banking law. He also highlighted that Libyan law requires the presence of a General Commissioner of the Ministry of Finance as a member of the Central Bank’s board, as this position enhances integration between economic, financial, and monetary policies. The absence of this position from the board’s composition represents a clear violation of the law and negatively impacts the balance of financial and monetary policy, in addition to the fact that the issued decision included names that were not agreed upon by the three parties involved in the dialogue.
On another note, Menfi mentioned in the memo the appointment of some board members who hold other senior governmental positions, which violates the principle of separation of powers and raises questions about transparency and efficiency, especially given that some members lack the necessary scientific qualifications. Furthermore, he stated that the session of the House of Representatives in which the governor was elected lacked the required transparency, casting doubt on the integrity of the process and raising questions about the basis on which these appointments were made. At the end of the memo, Menfi requested that the appointment of the Central Bank’s board in its current form be unacceptable until the legal requirements are considered and full compliance with legal standards is achieved, to avoid falling into a greater impasse if the current board, which does not meet the required legal conditions, is approved.
Meanwhile, the Presidency of the Libyan House of Representatives issued a decision appointing members of the Central Bank of Libya’s board. The decision appointed “Dr. Fakher Muftah Boufarna, Wissam Al-Saadi Al-Kilani, Dr. Fawzi Misbah Ali Boukham, Rida Muhammad Saeed Qarqab, Amer Muhammad Karker, and Ali Awad Ali Imran.” The bank stated in a post on its Facebook account, “With this national entitlement, the board of the Central Bank of Libya looks forward to performing its duties as mandated by banking law and its amendments, and to undertake necessary structural reforms for the recovery of monetary policy as desired by the Libyan people.” The Central Bank published the decision of the Presidency of the House of Representatives No. 17 for the year 2024 regarding the appointment of board members, issued on Monday, October 21, 2024, with a term of three years according to Law No. 1 of 1993 regarding banks, currency, and credit.
The UN mission considered that the progress made in resolving the crisis of the Central Bank of Libya revitalizes hope for future advancements in the political process, under UN auspices, leading the country towards general elections. This international welcome coincided with the approval from several European and Arab capitals involved in the Libyan file. The U.S. Embassy expressed its support for the UN mission’s welcome regarding the appointment of a new governor and deputy for the Central Bank of Libya and its hope that this agreement paves the way for restoring trust and enhancing governance in this vital institution. The U.S. Embassy emphasized that appointing a qualified technocratic board would be a critical step and urged reaching a consensus on a transparent and accountable mechanism for managing Libya’s revenues for the benefit of the people.
Among the significant challenges facing the Central Bank Governor and his team will be the reform of financial and monetary policies in Libya by controlling government spending and increasing non-oil revenues. Despite the formal unification of the Central Bank earlier, the problem of integrating payment systems and accounting operations between the east and west of the country remains unresolved, especially with the ongoing debates surrounding the questionable 50-dinar banknote and the authorities’ attempts to withdraw it from circulation. Amid all this, the unification of exchange rates and oversight of revenue management and the public budget remain pathways that could contribute to macroeconomic stability. The continuous rise in public spending represents a significant obstacle to the reforms the Central Bank intends to undertake, having surged over the past decade from approximately 40 billion dinars (8.43 billion USD) to nearly 120 billion (25.30 billion USD). However, the notable paradox relates to the differing state of the public budget and the balance of payments, where the public budget recorded a surplus of 1.7 billion Libyan dinars, while the balance of payments experienced a deficit of 8.9 billion USD. This presents a negative and complex situation that reflects the distortions and imbalances in the Libyan economy and explains the volatility in the exchange rate of the Libyan dinar against foreign currencies, prompting the monetary authority, represented by the Central Bank, to adopt a policy of adjusting the dinar’s exchange rate and imposing a 27% fee on foreign currency exchanges.
