Central Bank Circular 5/1201 on Financial Situation, Exchange Rate and Salary Increases

The Central Bank of Libya issued a formal rebuttal to the Prime Minister's February 17 speech regarding currency exchange rates and salary increases. The Bank warns that promised salary increases and a return to the 1.3 LYD/USD rate are financially unsustainable given Libya's fiscal trajectory, with consumption spending at 95% of the budget and subsidies ballooning from 20.8 billion to 61 billion dinars between 2021-2023.

This rare public disagreement between the Central Bank and Government of National Unity signals serious fiscal stress and policy fragmentation. Foreign investors should expect continued dinar weakness, potential further devaluation beyond the current 4.85 LYD/USD rate, and increased difficulty in currency conversion and repatriation. The Central Bank's explicit reference to 'parallel spending of unknown source' and loss of control over fiscal policy creates material uncertainty for financial planning and contract pricing in foreign currency terms.