In their interview with “Sky News Arabia”, the experts laid out broad and urgent lines that they believed should be implemented to save the Libyan banking sector, beginning with the dismissal of “Al-Kabeer”, affiliated with the terrorist Brotherhood organization, and ending with the inclusion of the ministries of finance, planning and economy in one ministry.
Attia Al-Fitouri, Professor of Economics at the University of Benghazi, explains the reasons for the decline in the banking sector, saying: The decline in the value of the dinar since the beginning of 2021 by more than 70% of its previous value, has had a very detrimental impact on the capital of commercial banks.
Among the forms of this damage – according to Al-Fitouri – is that “all commercial banks have business with their foreign counterparts related to credits, guarantees and credit, and banks are evaluated in terms of the volume of capital and assets that can be dealt with, and here we find Libyan banks with low capital compared to European or other countries.”
Al-Fitouri gave the example of the Jumhouria Bank, the largest locally in Libya, saying that until January 12, 2021, its paid-in capital was 140 million dinars, equivalent to a value of 100 million dollars, and with the devaluation of the currency, today it is less than 31 million dollars only.
He added that the “dwarfing” of the bank’s capital in this way pushes the large banks abroad not to deal with it, and likewise the rest of the banks that have less capital; Therefore, these banks need to increase their capital at a rate of no less than 220% in order to be able to refer to the previous value of the capital, if they want to maintain their position and their dealings with foreign banks.
Al-Fitouri accused the “great friend”, the head of the Central Bank, of adopting unilateral policies that led to the devaluation of the dinar.
He said: “Al Kabeer” lowered the value of the dinar without consulting the Monetary Policy Committee or the Board of Directors, and this is a big mistake to be held accountable for, and indicates confusion that negatively affected the economy and the citizen, as this measure did not bring any positive returns except inflation and increasing impoverishment of people.
The cure lies in a radical change in the Libyan banking system, as economic analyst Adnan Nafu explains.
This change, according to Navo, begins with the dismissal of those in charge of the bank, and an end to the “floundering” monetary and financial policies taken during the past ten years.
In turn, he pointed the finger at Al-Kabeer, saying that he “should be fired immediately,” considering that he “failed to manage the bank, and insisted on measures that aggravate the crisis, and he was the only one in his opinion, which led Libya to this state.”
He continued, “The time has come to engineer a free Libyan economy that creates business, and that can only be done by fighting corruption and monopoly, changing the central bank into a Libyan monetary institution, returning to its previous competencies the day it was born, integrating the ministries of finance, planning and economy into one ministry, and appointing a professional minister capable of heading it.” “.
The economist also suggested forming a crisis committee of banking, finance and economics experts; To correct the situation with clear and specific objectives and within a specified time frame.