Foreign Currency

Eastern Libya parliament speaker orders 27% dinar devaluation via forex tax — TradingView News

The speaker of eastern Libya’s parliament, Aguila Saleh, on Thursday effectively devalued the local dinar by imposing a 27% tax on purchases of foreign currency, in a move he said would only be valid until the end of the year.

The new tax in effect weakens the exchange rate from 4.80 Libyan dinars per dollar to between 5.95 and 6.15 dinars per dollar.

The decision was confirmed to Reuters by parliament’s spokesman Abdullah Belhaiq. The new tax could be reduced depending on the state’s revenue situation, according to the text of the decision.

Libya has been split since 2014 between warring western and eastern administrations, with rival factions seizing control of key economic institutions.

According to a 2015 political agreement, however, eastern Libya’s parliament and the High State Council based in Tripoli in western Libya are meant to agree on key issues affecting the country.

Last week, the central bank governor wrote to the speaker demanding a devaluation of the dinar via the 27% tax, saying it would generate estimated revenue of about $12 billion that would help pay off some public debt and fund development projects.

The parliament in Benghazi has now instructed the governor of the Central Bank in Tripoli to put the new tax into effect “so that foreign currency is available in all banks operating in Libya.

“The revenue generated from the tax fee will be used to cover the expenses of development projects, or is added to the resources allocated to the Central Bank to pay off public debt” a statement on parliament’s decision read.

Disputes over access to Libya’s state finances have often been at the heart of factional rivalry that has torn the North African country apart since a NATO-backed uprising in 2011.

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