Libya’s Central Bank has instructed commercial banks to implement a decision by the Speaker of the House of Representatives, Aguila Saleh, to temporarily impose a 27% fee on foreign currency exchange rates.
This came in a letter from Hamza Ashour Al-Jaeidi, Deputy Director of Banking Supervision at the Central Bank, to the general managers of banks.
The letter stressed facilitating foreign currency transactions, including opening letters of credit for all purposes, goods, services and personal use, in accordance with the Central Bank’s regulations. Customers must provide a declaration accepting the exchange rate plus the new fee.
Last Thursday, Speaker Saleh issued a decision to impose a 27% fee on the official exchange rate for foreign currencies. This followed a proposal by the Central Bank Governor, Al-Siddiq Al-Kabir, to adjust the Libyan dinar’s exchange rate and levy a 27% fee on foreign cash, expecting rates between 5.95-6.15 dinars per U.S. dollar after the fee for all purposes except sovereign and service sectors funded by the general treasury.
However, the Prime Minister of the Interim Government of National Unity, Abdul Hamid Dbeibeh, objected to imposing an exchange rate tax, warning of “negative consequences” that the Libyan citizen would bear. He made these remarks during an iftar attended by the Head of the High Council of State, members of parliament and politicians.
The decision aims to support the struggling Libyan dinar but risks further burdening citizens amidst an economic crisis and high inflation rates already straining households.