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Sunday, July 3, 2016

Libyans still have difficulties withdrawing cash from banks

Libyans are still suffering from a liquidity crisis with long queues forming at banks to withdraw cash making living conditions worse than ever for people.

The crisis continues even though large quantities of dinars have been printed in England by the central bank associated with the Libyan Government of National Accord(GNA) based in Tripoli and also printed in Russia by the rival bank of the House of Representatives based in Bayda. As noted in arecent article there were sent:
.. 70 million dinars worth about $50 million to the GNA central bank in Tripoli and is delivering another 1 billion dinars now and during Ramadan. The rival bank in Bayda, with governor Ali Salim al-Hibri, has reportedly printed 4 billion dinars worth of banknotes in Russia.The two banks agreed that the two different notes would be distributed in both the GNA area and that controlled by the HoR. The Tripoli bank received a large shipment as long ago as June 18th and Russian-printed notes have arrived as well.
Yet the shortage continues.The GNA central bank said that the cash crisis cannot be solved by printing new banknotes. It claimed that political fragmentation, stoppage of oil production, and lack of security caused the cash crisis. While these are certainly problems, it is hard to see how they in themselves would cause the cash crisis. If the new banknotes are being delivered to the banks the banks should be able to pay out salaries etc. with the new cash. One important factor in the shortage may be that Libyans have lost confidence in the banking system and thus are hoarding them at home rather than depositing them, a factor the Central Bank notes.
At least one bank, the Sahary, closed down because of militia attacks. Even when Libyans are able to withdraw some cash they are finding that the value of the Libyan dinar is falling. The exchange rate for the Libyan dinar to the US dollar was about 4 to 1 at the beginning of Ramadan but last Sunday was 4.55 to the dollar. Since March the rate had been from 3 to 3.9 but went up to 4 several times in May.
One exchanger said that the exchange rate was unstable and was rising constantly and the market was in chaos. He said that he no longer held dinars: "Libyan money has no value anymore. As soon as I sell dollars, I buy dollars now’’. He said that if the situation continued life could become impossible for Libyans. The exchanger said that the rates he quoted were an average of quotes from one money exchanger to another.


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