Libya will gradually reduce a fee of 183 percent on foreign currency transactions once a spread between official and black market narrows, a government official said on Wednesday.
Last month, Libya’s internationally recognized government imposed a fee of 183 percent on hard currency transactions, effectively revaluing the dinar to 3.9 versus the dollar compared with the official rate of around 1.4.
Officials hope the move will bridge the gap to the dominant black market, a source of corruption as armed groups with access to dollars at the official rate make huge profits through import scams.
The dinar has gained a bit since the fee was introduced, and the black-market rate is quoted at around 5.5 to the dollar. It previously traded at 6.
“The purpose of imposing high fees... is to absorb or withdraw the money supply from the dinar in the (parallel) market or the so-called cash mass outside,” said Imhamid al-Darweesh, economic consultant of the U.N.-backed administration.
“The fees will be gradually reduced in line with the devaluation of the dollar on the black market ... until the stability of the dollar exchange rate reaches a certain level,” he said, without giving a target.
His comments came after a senior official said late on Tuesday the rate was not fixed, without elaborating.
The foreign exchange fee is supposed to be paid on commercial transactions, but it remains unclear how it will be collected. Armed groups effectively control banks and stand to lose if they have to pay.
The black market rate and economic reforms became urgent issues late in August, after armed groups clashed over access to public funds.
The U.N. brokered a ceasefire that has since been broken, although the last few days have been relatively quiet in the capital.