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Saturday, June 4, 2016

Confusion and contradictory statements continue over rival currencies



There is continuing confusion and contradictory statements about the status of newly arrived banknotes printed in Russia for the Tobruk-based House of Representatives (HoR) government. At first the Presidential Council of the UN-brokered Government of National Accord rejected the bills and the US Embassy issued a statement saying the bills were counterfeit.

However, after a meeting between GNA authorities and those of the HoR, the GNA reversed its position claiming that the notes would actually help solve the cash shortage in Libya. However, the head of the Tripoli based Libyan Central Bank (LCB) still rejects them, apparently.

As TunisiaLive puts it: " At the time of writing, Libya’s GNA controlled Central Bank appears to have rejected the legitimacy of the Eastern Dinars, though the GNA itself has accepted the notes as an alternative to their own. It is not currently clear if Tunisia will recognise one or both currencies." The UN position and that of many countries is that there is only the one LCB based in Tripoli and supporting the GNA. However, declaring illegitimate, banknotes that the GNA recognizes is a strange way to show support.

The Tripoli-based CBL announced that it had received 112.5 million dinars worth of new banknotes yesterday. It posted a photo of a plane being unloaded. The banknotes are printed in the UK by De LaRue. However, none of the notes seem to have been distributed as yet. The CBL also claimed that another 250 million banknotes should arrive by the middle of the month.

However, critics say that a complete list of cargo planes arriving at Mitiga airport at Tripoli showed no cargo planes had arrived. The critics say that the money must have arrived earlier and being hoarded or else it did not arrive at all. A recent tweet notes: "#Tripoli sources: despite CBL announcement that currency was delivered, still no cash in the banks today. #Libya". The Tripoli CBL has made no more statements about the issue and denied that the Governor of the bank would hold a press conference on the issue. The new banknotes are to be distributed throughout Libya.

The critical shortage of cash has prompted new demonstrations in Tripoli. They are described in theLibya Observer and also the Libya Herald. The PM of the GNA Faiez Serraj has called for an urgent meeting between the two rival central banks and the HoR Finance Committee to help solve problems. The black market rate of Libyan dinars required to buy a US dollar is going up, reflecting the uncertainty being created.

​The situation is not being improved by the recent arrival of the GNA in Tripoli. Protesters against the cash crisis also complained about low living standards and poweroutages since the new GNA took power. The GNA and the UN are calling for unity with the GNA but the eastern part of the country is still being governed by the HoR and so far it has not voted confidence in the GNA as required by the Libyan Political Agreement(LPA). The LPA requires that the commander of the Libyan National Army (LNA) would relinquish his position to the Presidential Council(PC) of the GNA. General Khalifa Haftar and his supporters reject this and want him to remain in his position.

The eastern banknotes are already being put into circulation. A tweet reads:"New bank notes from#Libya Central Bank Al-Bayda arrive to the cities of Jalu, Awjila and Jakharrah, a total of 5mil" More are expected to be distributed this week end. The eastern notes should also be distributed in the west in areas controlled by the GNA but it is not yet clear whether this will happen.

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