LIBIA has the largest petroleum reserves in Africa. However, devaluation and inflation caused the country that was attacked by the United States (US) to experience a crisis.
“The crisis due to currency depreciation has raised the cost of importing food and other goods,” said Libyan Mohamad al-Weheshi, 29.
With a monthly income of around US$150 or Rp. 2.3 million, he admitted that he would live without being able to buy meat. The Libyan dinar currency which officially trades at 4.8 to the US dollar recently fell on the parallel market from around five dinars to the greenback to 7.5 currently.
Economic analyst Abubakr al-Tur said Libya is experiencing a critical situation with rising prices and currency devaluation. This, he told AFP, had a major impact on the purchasing power of people, who were increasingly unable to obtain basic commodities.
Mentioning the recent business closures and layoffs, the analyst said this has been difficult and has impacted all classes, except the rich.
Interim Libyan Prime Minister Abdulhamid Dbeibah, who leads the UN-recognized government in Tripoli, says his government shares the same concerns as the Libyan people.
Also read: Despite many obstacles, China’s economy is believed to recover soon
He is determined to return the dinar to previous levels and keep Libya’s economy at bay. The country is still struggling to recover from years of war and chaos since the US invaded and overthrew Moamer Kadhafi in 2011.
This North African country with a population of seven million people is plagued by instability and corruption. Dbeibah’s government in Tripoli uneasily shares power and funds in Libya with a rival government in the oil-rich east backed by military strongman Khalifa Haftar.
Libya earns net income of around US$20 billion or IDR 313 trillion per year from oil and gas exports, which contribute around 95% of the country’s income.
Also read: China’s economic growth this year is only targeted at 5%
Much of this wealth is used to finance a bloated public sector that employs nearly a third of the population. Apart from that, there are also state subsidies intended to ensure low prices for fuel and, until recently, basic food items.
Dbeibah has launched a major infrastructure project, with construction cranes now dotted across the capital. Analyst Tur said the government had indeed implemented reform and reconstruction projects, but these programs were still insufficient.
The cost of living crisis and foreign money crisis occurred following Libya’s Central Bank announced measures it said were aimed at ensuring greater financial stability.
Also read: 19 people killed by crocodiles in Tanzania in the last 5 years
This law limits import letters of credit, the only legal way for importers to purchase products in foreign currency for overseas purchases of medicines and food products.
This forced importers of cars, machine tools and construction equipment to turn to parallel markets in search of foreign currency. Meanwhile, purchases of foreign currency by the public have been limited to $4 thousand per person per year, down from $10 thousand or IDR 156 million.
Household purchasing power has taken a further hit as prices of staple foods such as pasta, rice, sugar and flour, which were previously largely subsidized, are now indexed to the dollar rate on the parallel market.
Meanwhile, in recent months there have also been delays in state salaries for 2.3 million Libyan civil servants and pension payments. “So, when prices soar, it is the pensioners who suffer the most,” said Mohamad al-Werfalli, 65, who was shopping with his wife in a Tripoli supermarket.
(France24/Z-9)
#irony #Libya #oilrich #country #continues #hit #crisis
