Libya's Top Banker Calls for International Community to End Crisis

Channel: Bloomberg Markets and Finance
Published: 5 hours ago

Description
Jan.27 -- Central Bank of Libya Governor Sadiq Al-Kabir says he is asking the international community to help end the shutdown of Libya's oil ports by Eastern Military Commander Khalifa Haftar. One of Haftar’s main demands has been the removal of Kabir and a fairer distribution of oil revenues to s



Transcript
Libya'S central bank governor mr. al siddiq, el kebir, thank you so much for joining bloomberg. Television again, thank you. Libya has been in political turmoil for years and, most recently we are seeing the tension really escalate with the eastern commander, khalifa haftar, putting a blockade on your oil ports that has forced the national oil company to declare a force majeure. When do you think ...
his blockade will end, you could ask sofia nicosia. It is very unfortunate that this decision to stop oil production and exportation was made. This is going to be very harmful to libya and libyans in general. As you know, income from oil covers 93 % of the overall state. Income covers around 70 % of public expenditure, and there is also the choice of timing. This comes after we have done some economic reforms which have had a positive effect on the economy in general. With positive indicators in terms of inflation, the exchange rate of the libyan dinars and the parallel market and growth in general, all of these were positive indicators. I consider this decision to be a bullet in the head.

I truly hope this decision will be undone, that oil production and exportation will be resumed. This is very important to libya. The future of libya, and for libyans in particular, reforming and making financial institutions more transparent, has really become a central point to a peace deal and a key demand as well for the united states and others. What steps are you taking in regards to the central bank of libya around a year and a half ago we adopted procedures to produce periodical reports every three months. We would produce a report on expenditure in revenues on all of the data that has to do with the central bank. Starting from six months ago, we started to produce these reports on a monthly basis in arabic and in english. I believe in regards to the central bank, we have fulfilled the required transparency conditions. What remains to be done is for the government or the ministry of finance, in particular, to publish detailed reports on the salaries and areas of distribution, but as far as the central bank is concerned, everyone agreed in the last meeting with the american government in the framework Of the economic dialogue and tunis that the central bank publishes reports on the data it has, i read the berlin communique and it talks about this fair distribution of libya's oil reserves for as part of the peace deal. Hof tar has said that the east doesn't get a fair distribution. What'S the strategy, do you think they're getting a fair distribution? How can you see that actually working? I know because i will answer this question with numbers. Numbers speak for themselves. Let me first say this is a false claim.

Secondly, and as i mentioned before, in 2019, the income from oil covered 70 % of government expenditure. This means there is a 30 % deficit. It in turn means that the income from oil doesn't cover all state expenditure. So this is a false claim, especially when we consider that the minister of finance is from the east, and the minister of the economy is from the east. This is all to show that the claim that there is no fair distribution of wealth is false percentage. As you know, the state budget has four chapters. The first is salaries, the second is running costs. The third is development, and the fourth is support. This budget covers all of libya. With no exception, the government pays the salaries of 1. 8 million employees. This is the highest percentage in the world, it is more than 25 %.

Needless to say, it is part of what we inherited from the previous gaddafi regime. Many say you are the most powerful man in libya. Would you consider increasing half stars allocation of this distribution? Potentially, if he was willing to lift the blockade on the ports, ha ya know welcome, given my role as the governor of the central bank of libya, i do my job professionally, with complete neutrality and with responsibility and accountability. The political agreement ran find by the security council in december 2015, describe the role of each state institution. Our role is to implement the budget items, we agree on the budget and the budget is prepared by an internationally recognized government. We agree on the budget and spend from the revenues. If there is a deficit we are committed to covering it. What i mean is there is already fair distribution for all libyans. It already exists regardless of east west, north and south. I understand you say it's equal, but if half star was to come to the table and say i'll lift the blockade if our allocation is increased, would that be an option on the table option? Half tar is a libyan. Just like myself. This is up to the wish of all the libyans not to me or to half tard, to say this, or that the political agreement adopted by the security council sets the conditions for when to change the governor.

Once these conditions are met, i am ready. Have there been any discussions about relocation of funds yet with any parties what you mean like current discussions about possibly changing the allocation and distribution of oil revenues? As i said, the oil revenues cover the budgets items. The budget spending covers all libyans with no exception. Logically speaking, there is already fairness in the current distribution. I understand what you're saying, but hafte would say that it's unfair he's even called for you to step down. What would be your response to him? I know that kind of if we recognize the government that was agreed and adopted by the security council, that there is a political agreement which we all welcomed. Then we should abide by the political agreement and do as the political agreement says, there's also a central bank. In the east, when do you think libya will come under one banker? The solution to this division between institutions, whether it be the central bank or other institutions, lies in resolving the political issue between the relevant parties. If the political issue is resolved - and there is a unified government for all of libya, the central bank will unify the government in the east is spending, and there is another internationally recognized government that is also spending according to the political agreement. If the government is unified and covers all of the libyan land, the problem of institutions, including the central bank, will be solved. Angela merkel, vladimir putin, mike pompeo. No one was able to get half star to lift the blockade.

What do you think it'll take another while there, i think. In my humble opinion, there is a division in the international community which led to lack of signatures in berlin. Once the vision of the international parties is unified, we will see signatures and there will be peace in libya. I believe the american role will be major international community. That is also that's very divided, as you say, is this more of the united states having more of an opinion europe or moscow? No, no, not a few. If you're over families huh, there is division in europe between france and italy. There is also, of course, a division in the visions of russia and the us and regards to this issue. I truly hope that they will reach an agreement to bring together the libyan parties and appoint a unified government. The problem will be resolved. I reiterate: there is no problem between the libyans. The external intervention is the main problem. What would you prefer not to possibly come to the table with those leaders in the east? Would that not make more sense to for libya decide and both parties come to the table? Even in berlin we weren't able to get both parties in the same room.

The international community, through the un mission, agreed to hold a meeting concerning all the libyans in general. In april 2019 and adamas, however, haftarah surprised us with an attack on four four, even though mr. gutierrez, the un secretary-general, was in tripoli at the time. This was a surprise for everyone, a surprise for everyone. We and everyone were ready to go to gadem s. To agree on forming a national unity government and end the current disagreement, we're gon na have these committees meeting in geneva. Do you know who's going to be there? What date will be or any details you can offer about this next step in the peace talks? I think you see my team on geneva, i believe the geneva meeting the mission asked the parliament to name 13 people and also asked the high council to name 13 people. The mission will also name 13 people then all will meet. I do not have the detailed agenda of the meeting, but it will be in the framework of unifying visions. I think i think the meeting will be on the 9th of february, but you won't be attending that no have you been in closed talks with international leaders and and who exactly? Needless to say, we in the central bank are focused on the financial and monetary aspects. We try to help with providing solutions to economic issues. We have provided suggestions that were productive, but not at the political level.

At the political level, we are not a party. I want to ask you about the financials. You have a new year 2020 and you're, starting this new year, with the oil revenues going to be depleted at the start of the year. Given more than half of your exports are gon na be cut. What does that mean for 2020 in libya's financials? Well, i know, could another exam. I wish, because the kuna, as i said, we were hoping that our situation in 2020 will be better, especially when we noticed there was an increase in oil production and exportation. The revenue of this increase was positive also in regards to annual growth. We achieved an annual growth of 5. 5 in 2019, but then came the surprising catastrophe of shutting down oil production. It will have dire effects on us at the central bank, on the economy and on libyans in general. We need to sit down with the government to agree on the budget of 2020, how it will be and what the funding mechanism will be. We truly hope that the international parties will support the resumption of oil production and exportation and that it will be fast reserves right now and has the current situation impacted that number, but it is too early to tell we still do not know what negative impact there Will be, we have been through a similar experience in 2013, when oil production was shut down with the changes in international prices, we lost about 160 billion dollars in direct and indirect losses.

As you know, a shutdown affects the pipelines and their maintenance. There are also expenses of storage, there are direct and indirect costs and all have negative impact on the state budget, and just finally, what price of oil are you looking at for 2020 for your budget will help. You know we hope it is at the same level of the current prices, especially given the current crisis, the gulf crisis, iran in the us, the current oil prices, i believe, suit everyone. But if you ask me personally, of course, the higher the better for everyone we're at 61 now yeah, it is comfortable for everyone, the exporter, as well as the importer, i believe the prices are suitable. Mr. al siddiq, el kebir. Thank you so much for your time. Thank you very much. Thank you.


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