- Middle East analyst based in Dubai, with access to Saudi royal advisors and business elite
- Libyan investigative journalist in Tripoli
- Turkish investigative journalist in Istanbul
- Top aid to Turkish deputy foreign minister
Libya’s Currency Crisis: Part of the Resource Problem
While it won’t resolve the broader war for control of Libya’s government (read: oil wealth), getting a handle on the country’s liquidity crisis could starve militia groups who are making money off this (not counting for their funding from external actors). Militias have been making money off the gap between official and black market exchange rates.
Libyan officials say the liquidity crisis should be resolved by February of next year by converging the rates and restoring supply of Libyan dinars and dollars. The next step will be to start fuel subsidy reductions, on which Libya is currently spending some $5 billion annually.
Not only the exchange gap, but also these fuel subsidies have been feeding militia coffers, via smuggling revenues. For oil and gas investors willing to brave what is essentially a civil war that is nowhere close to being resolved, resolving this liquidity crisis and getting fuel subsidies under control would—according to officials—put $1.8 billion into budget coffers next year, enabling them to start (or re-launch) major energy development projects. We note, however, that there are multiple variables…