Libyan Central Bank Announces Printing of New Banknotes to Address Liquidity Crisis
The Libyan Central Bank announced last week that it has entrusted an English company with the printing of new banknotes worth 30 billion dinars. This operation is expected to gradually resolve the liquidity crisis faced by Libyan banks starting from January 2025. The old banknotes will be withdrawn according to a schedule, although the details have not been disclosed.
This liquidity crisis is not new, but it has recently worsened. Libyans have grown accustomed to queuing in front of banks to obtain cash and withdraw their salaries. ATM withdrawals are capped at 1,000 dinars, often only once a month.
State employee salaries account for the largest share of expenditures, amounting to 48.6 billion dinars from January to October 2024, out of a total of 67.8 billion dinars in oil revenues during this period. Moreover, state employees, who represent 89% of the country's active population, often receive their salaries late. This situation has eroded trust in the financial system, which is already fragile. Cash is rarely redeposited into banks, with citizens preferring to keep their cash at home.
Meanwhile, the liquidity shortage in Libya has led people to increasingly turn to bank cards. However, the infrastructure is still insufficient to facilitate daily transactions, particularly during liquidity crises.
For Tunisians who have significant economic ties with Libya, this means a possible deterioration in the exchange rate in the medium term. Printing massive amounts of banknotes has never been a good solution to address liquidity shortages. The decline in our neighbors' purchasing power is not good news, as they represent a cornerstone for the tourism and health sectors.
