GNA Finance Ministry: Oil facility closures depleting foreign currency reserves and raising inflation

Alwasat - Cairo Fri 13 Mar 2020, 01:49 PM
alwasat radio

With the continued closure of oil facilities and ports since January, a report issued by the Ministry of Finance for the Government of National Accord (GNA) released negative estimates of Libyan economic performance during the first half of this year, due to a decrease in foreign exchange reserves and high levels of inflation resulting from an expected decline in the value of the Libyan dinar.

The Ministry of Finance expected foreign exchange reserves to decrease to $66 billion if the closure of oil facilities and ports continue till June, according to the monthly report prepared by the Ministry's Macroeconomic and Financial Analysis Unit. This is compared to $77 billion in October 2019.

The ministry indicated that the central bank can use an important part of the reserves to achieve stability but that withdrawing from it will lead to a decrease of about $11 billion by the end of June 2020.

The ministry mentioned "the stability of foreign exchange reserves till last October," was attributed to "the relative stability of oil revenues and fees imposed on foreign exchange sales."

The losses from the "illegal closures" of oil facilities since last January amounted to about $3.08 billion after crude production fell to 97,500, according to figures announced by the National Oil Corporation.

Regarding the deficit in the public budget, the finance report said, "yhe general budget may register a deficit by April," noting that "the decline in oil revenues will be followed by a decrease in imports of goods and services." 

The Ministry of Finance added the possibility of an inflationary recession, noting that "the devaluation of the dinar by 6% in the parallel market during the month of January 2020, compared to its value in December 2019."

The dollar exchange rate recorded a jump in the parallel market this week, rising to the level of 5 dinars, for the first time in months.

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