Libya’s Prime Minister Abdulhamid al-Dbeibah is facing a new political crisis as the central bank governor Sadiq al-Kabir accused him of overspending and undermining the country’s financial stability.
Budget dispute
In a letter published on Tuesday, Kabir urged Dbeibah to stop what he called “parallel spending from unknown sources” and to adopt a unified national budget. He also questioned the source of funding for the salary increases that Dbeibah promised to public sector workers and security forces.
Kabir’s letter is seen as a direct challenge to Dbeibah’s authority and legitimacy, as the prime minister relies on the central bank to release money for his government. Dbeibah was appointed in 2021 through a UN-backed process to lead a transitional government until national elections scheduled for December 2024. However, his government lost the recognition of the parliament in the east after the elections were postponed due to political and legal disputes.
Libya has been divided since 2014 between two rival administrations, one in Tripoli and the other in the east, each backed by different armed groups and foreign powers. The country’s oil revenues, which account for most of the state budget, are managed by the central bank in Tripoli, but the eastern parliament has been trying to establish a parallel central bank in its territory.
Economic woes
The budget dispute comes amid a worsening economic situation in Libya, as the local currency has been losing value on the black market and inflation has been rising. The country’s oil production, which was restored to over one million barrels per day in 2021 after a blockade by eastern forces, has also been affected by technical problems and security incidents.
Libya’s economy has been battered by years of conflict, corruption, and mismanagement, as well as the impact of the COVID-19 pandemic. The country’s GDP contracted by 66.7% in 2020, according to the World Bank, and its public debt reached 156% of GDP. The UN estimates that more than half of the population lives in poverty and needs humanitarian assistance.
Hope for peace
Despite the political and economic challenges, Libya has also seen some positive developments in the past year. The warring parties agreed to a ceasefire in October 2021, and a UN-led dialogue process resulted in the formation of a new unified executive authority. The UN Security Council also endorsed a roadmap for holding elections and ending the transitional period.
The international community has expressed its support for Libya’s peace process and urged all parties to respect the ceasefire and the electoral timeline. The UN has also called for the withdrawal of all foreign fighters and mercenaries from Libya, as well as the respect for the arms embargo. The UN envoy for Libya, Jan Kubis, said that the Libyan people deserve a peaceful and prosperous future after a decade of violence and instability.
Source: Reuters
