Libya: Licences for foreign exchange issued by CBL

The Central Bank of Libya (CBL) issued licences for foreign exchange bureaux on 21 July for the first time in the country's history. Demand for the licences was high, with over 480 applications nationwide. In Tripoli and Benghazi a public draw for the heavily over-subscribed licences had to be organised. This marks the first time non-bank operators have been allowed to exchange foreign currency which was the preserve of Libya's major banks under the Qadhafi regime. For years the exchange rates on foreign currencies were heavily manipulated by the state, which restricted their availability in the market and awarded more favourable rates to associates of the government, as well as state-owned enterprises. This cultivated a huge black market in Libya, leading to the unregulated circulation of many currencies and, in particular, the US dollar.

Despite the issuance of licences, the CBL is still largely in control of the exchange of foreign currency. Banks still require proof of entry of goods into Libya, in the shape of a pro forma invoice, for large transfers of $100,000 and above to be transferred from one account to another. Once the goods arrive, they are only released by customs when proof of the transfer of this approved sum is provided by the individual.

Any large transfers that were not for the purchase of imported goods would usually have been conducted on the black market – formalised and reliable as it is after decades of existence. Although this measure will go some way to curbing transactions in this market, time will tell if the remaining restrictions on transfer limits by the CBL may not also have to be lifted and further autonomy given to the newly established forex bureaux.

For more news and expert analysis about Libya, please see Libya Focusand Libya Politics & Security.

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