The Central Bank of Libya (CBL) – http://cbl.gov.ly/eng – has accused local Libyan commercial banks of corruption leading to the sharp rise in the black market exchange rate of foreign currency.
The CBL also announced yesterday that it was referring over 30 companies to the Public Prosecutor’s Office accused of foreign exchange smuggling, money laundering with false documents totaling LD 3 billion.
In a statement released yesterday the CBL denied that it was responsible for the recent spike in the black market exchange rate and its upward pressure on prices in the market.
In response to this, the CBL has announced a raft of counter measures including checking for rogue companies opened recently as part of the foreign exchange scam, referring companies to the Public Prosecutor’s Office, tightening foreign currency debt card regulations, tightening the opening of Letters of Credit (LCs) procedures, reducing categories of goods available for the opening of LCs, and inspections on imported goods through LCs.
The corruption allegedly occurring in commercial banks is whereby some bank officials are thought to be aiding and abetting in the opening of fake LCs. In this case, the goods supposedly imported through the opened LC are either over-valued in the pro forma Invoices used to open the LCs, or the goods are never imported into Libya after the hard currency is transferred abroad.
Honest banks are supposed to demand documentary evidence from customers issued by the customs authority proving that goods for which foreign currency has been transferred abroad have actually arrived in Libya.
The customs authorities for their part are supposed to ensure that the imported goods are of the value shown on import documents – prior to approving customs clearance.
A number of black marketers have also opened up fake companies so as to be able to open LCs.
The CBL has also raised the minimum balance needed for foreign exchange Visa and MasterCard to US$ 10,000 in an effort to counter the illicit use of debit cards by what it referred to as ‘’blood sucking profiteers’’. It has also ordered the commercial banks to recommence the issuing of debit cards to the general public.
Some banks had ceased issuing debit cards to members of the ordinary public so as to restrict and monopolize the flow of hard currency to some of the minority of black marketers.
These foreign currency profiteers, often in cahoots with debit card issuing bank personnel issue tens and hundreds of debit cards and travel abroad to withdraw hard currency which they return and sell at the black market rate in Libya.
The CBL has taken these measures after coming in for heavy criticism over the fasting and holy month of Ramadan as market prices started to rise sharply. Some critics were accusing it of conspiring in the foreign exchange scam against the general public. It has refuted the accusations directing the blame squarely at the commercial banks.
With regards to public demands that the CBL should open a large number of new foreign currency bureaux so as to by-pass the corrupt commercial banks, the CBL responded that this would not solve the problem and that the foreign exchange rate will only return to its previous levels once oil exports return to normal levels.
It will be recalled that the US$ had suddenly spiked from 1 to 2.10 to around US$1- LD 2.40 virtually overnight as opposed to its official rate of 1 to LD 1.30. As the number of LCs opened by the CBL for the import of goods has decreased due to lack of foreign currency reserves, prices have risen as more and more goods imported are imported using the black market rate.
LH Tripoli 15.07.2015