Exclusive: Libyan government and central bank fail to agree on 2019 budget – sources

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TUNIS (Reuters) – The internationally recognized Libyan government and central bank have failed to agree on a national budget for 2019 due to a row over spending priorities, and feuds could last until in March, said three sources close to the talks.

FILE PHOTO: Cars are parked outside the Central Bank of Libya in Tripoli, Libya, November 14, 2017. REUTERS / Ismail Zitouny / File Photo

The conflict is a setback for Western powers and the United Nations, which have called for reforms to tackle a war economy that has enriched armed groups in a conflict resulting from the overthrow of Muammar Gaddafi in 2011.

The World Bank, the UN and Western powers held a meeting in Tunis with Libyan officials last week to urge them to finalize a budget that should have been approved in December.

But no deal was reached, as the Tripoli administration and the central bank could not agree on how to use the revenue from a new fee on hard currency transactions, among others, said. diplomats as well as sources close to the talks.

Agreeing on a budget could take until March, when the next meeting is scheduled, they and diplomats briefed on the talks said.

Tripoli-based government officials, including the finance ministry as well as the central bank, did not respond to phone calls seeking comment.

Without a budget, the government can only pay public salaries and fuel subsidies, but not the investments needed to rehabilitate dilapidated schools, roads and hospitals.

Libya has not had an adequate budget since 2016 as its internationally recognized parliament is based in the east and supports a parallel administration there. Tripoli is home to the UN-backed government but has little power.

Since then, Western countries and international institutions have held meetings between officials in Tripoli, the central bank and a senior legislator in parliament.

These efforts also include a tactical deal with the eastern government whose salaries are paid by the central bank – the United Nations wants to maintain a difficult balance between west and east while trying to prepare Libya for elections for unify institutions.

COSTS

The budget line stems from a dispute over how to spend the new 183% fee imposed on private currency transactions in October, the sources said.

The Tripoli government and the central bank had imposed the fees under Western pressure, amounting to a de facto devaluation to narrow the gap between official rates and those on the black market.

Armed groups have profited from the spread because, with their power, they get cheap dollars from the central bank and sell them on the black market.

The Tripoli government wants to use the levy for development, but the power plant wants to pay off the debt, sources said.

There would be more room to spend this year as oil revenues rose 78% to $ 24.5 billion in 2018 as the wave of blockages in the oilfields faded, halving the deficit to 4.6 billion dinars ($ 3.32 billion).

The dispute was complicated by a power game within the Presidential Council which runs the administration of Tripoli.

Three members of the council accused Prime Minister Fayez al-Serraj of seeking to “control power and decisions, (pursue) unexamined policies and irresponsible behavior,” according to a statement. He warned of the collapse of the state.

Diplomats said the row has made it harder for officials to agree on next reforms such as cutting fuel subsidies, which also benefit armed groups who smuggle cheap fuel into the country. foreigner.

Additional reporting by Ahmed Elumami, editing by William Maclean


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