Moves to restructure and modernise state-owned institutions and encourage the emergence of private banks
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important step towards the creation of a market-driven economy was taken
when Tripoli unified Libya’s multi-tiered exchange rate last year.
By ending the co-existence of official, commercial and black market
rates and effectively devaluing the Libyan dinar, the authorities have
increased the competitiveness of Libyan companies and encouraged foreign
investment. Foreign exchange rationing and import licensing requirements
have also been eliminated.
Mohamed El Huwej (INTERVIEW), Secretary for Finance, says: “We have stabilised our currency. We have also cleared our domestic and foreign debt and we now have a surplus in our economy. We have started to open up the private sector and to welcome foreign investment.”
Efforts have been made to rationalise the tax system, broaden the tax base, and strengthen tax administration. Steps have been taken to combat money laundering and the financing of terrorism.
In the longer term there are plans to establish a stock exchange. Meanwhile, moves are under way to liberalise and strengthen the country’s banking sector, which is heavily dominated by state-owned banks. A committee has been established to look into the restructuring of the banks and inward investment is being sought for the first time.
Mr El Huwej says it is essential for the banks to modernise and introduce new methods. He believes the emergence of new private banks is essential to the creation of a successful private sector. “The banking sector is the bottleneck in the process and needs to be cleaned up,” he says. “My priority is to create new private banks which will then battle it out for survival, and the best will remain standing. We need competition to create good management.”
The Finance Secretary wants to see joint ventures between Libya’s Central Bank and foreign banks. “This is the time for financial investors and companies to come to Libya,” he declares. “We are open to all the big financial institutions to come and contribute to the changes that need to be made. There are no closed doors.”
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Founded in the 1960s, the state-owned Development Bank of Libya finances development projects and encourages the growth of the private sector, with a particular focus on small and medium-sized enterprises (SMEs). ‘We are working to encourage investment in small-scale industries and services,” says Ajeli Breni (INTERVIEW), the bank’s Chairman. “We have many projects in mind and if we succeed, things will drastically improve.”
The bank is ready to assist foreign investors and cooperate on projects in areas in which it is particularly involved. Says Mr Breni: “There are currently more than 360 industrial projects set aside that are in need of foreign investment. We will not be involved in all those projects; we will choose those that are most profitable for foreign investment and for our economy. The sectors we are concentrating on are the building materials and foodstuffs industries.”
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