23 October 2024: HoR appoints new CBL Board
This week we look at the new HoR-appointed CBL board, the 5+5 JMC meeting in Sirte, and efforts to increase oil production.
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HoR appoints new CBL Board, nominally ending the CBL crisis
Incident: The House of Representatives (HoR) has finally appointed the six members of the Central Bank of Libya (CBL) board this week, nominally marking the conclusion of the recent CBL crisis – though potentially just beginning a new chapter of struggles over control of the state’s funds.
On 21 October, the presidency of the HoR issued decision No.17 of 2024 appointing six men to the CBL Board of Directors. These are Fakhir Muftah Bouferna; Wissam al-Saadi al-Kilani al-Saadi; Fawzi Misbah Ali Boukhazam; Rida Muhammed Saeed Gargab; Amer Muhammed Karkar; and Ali Aawd Ali Omran. The decision noted a letter dated 14 October from the CBL Governor proposing members of the CBL board to be appointed and a follow up letter on 17 October replacing the nomination of one board member with another.
The decision was welcomed by the CBL the same day, saying it ‘looks forward to performing its duties assigned to it in accordance with the Bank Act No. (1) of 2005’ and undertaking ‘the necessary structural reforms to restore monetary policy to what the Libyan people aspire to.’ Second Deputy HoR Speaker Misbah Douma also welcomed the decision, saying the appointment of the board will ‘have a positive impact on the economic situation of the country’ and calling for the appointment of a new government to oversee elections.
Although there has been no formal comment on the board by the Government of National Unity (GNU) or (PC) at the time of writing on 22 October, PC Advisor Ziyad Daghim has questioned the validity of the HoR’s decision.
In a press statement, Daghim said that the HoR decision contained legal violations, including a lack of jurisdiction due to the absence of a law to determine employees of sovereign institutions. Daghim also indicated that the decision violated the law by not specifying the Deputy Minister of Finance as the seventh board member. Daghim said he expected a judicial appeal, or the issuance of a new decision by the HoR presidency to correct what he called the ‘serious violations’ in the current decision.
Separately, GNU PM Abdul Hameed Dabaiba and PC head Muhammed al-Menfi met to discuss their plans to hold a national referendum. On 21 October, PM Dabaiba and Menfi discussed updates on the political and economic situation in the country. This included their efforts to ‘activate the national referendum’, stressing the ‘importance of restoring the opinion of the Libyan people as a fundamental step in achieving the political solutions needed to reach the elections.’
Comment: Fakher Bouferna is the former Minister of Planning in the GNU. Wissam al-Saadi is the Chairman of the Economic Reforms Committee at the GNU Ministry of Finance and is understood to be a close friend of former CBL Governor Sadiq al-Kabir. Fawzi Boukhazam is the Director of the Payments and Settlements Department at the CBL. Rida Gargab is the Director of Financial Control at the Audit Bureau. Amer Karkar is a member of the GNU’s Budget Department. Ali Omran is the Financial Manager of the Iron and Steel Factory. The Deputy Minister of Finance would usually be appointed as the seventh board member to help the consistency of financial and monetary policy in the country. However, due to the existence of two governments and the fact the HoR does not recognise the GNU, it was decided in the HSC-HoR CBL agreement not to include this position on the board.
The major economic issues facing Libya have not gone away simply because the CBL governance crisis has been resolved. Indeed, most issues have worsened due to the period of instability and lack of access to international banking systems and accounts. It seems CBL Governor Naji Essa is attempting to address issues around liquidity, foreign currency and the exchange rate in part by expanding and trying to regulate black market foreign exchange traders, who currently operate unlicensed and with little controls. However, it seems Essa is less concerned with/ focused on managing Libya’s fiscal deficit. In theory, this marks a return to a more traditional central bank role whereby it is the government which sets the fiscal policy and public spending management, rather than the CBL.
The PC recently established a National Referendum Commission essentially with the aim of holding a referendum on whether the HoR and HSC are meeting the needs and interests of the Libyan people. The HoR has said the PC does not have the authority or jurisdiction to set up such an entity.
Significance: The appointment of the CBL board is a major symbolic step towards ending the CBL crisis and stabilising the Libyan economy. The existence of a functioning board (which Libya has not had for many years) should create greater stability and accountability in policy and decision-making, curtailing the ability of the Governor to take unilateral decisions. However, it will remain to be seen whether this board will act as a primarily neutral, technocratic entity, or whether board members will be influenced by the interests and demands of their political and social allies. Given the wider politicisation of Libyan institutions and the economic landscape, the latter seems more likely.
By focusing on introducing transparency measures and taking steps to address key issues such as liquidity and access to foreign currency, it seems Essa is trying to set the tone that the CBL will do things differently under his leadership. Aside from the various monetary challenges facing Libya, the biggest challenge is likely to be agreeing on a budget or some sort of financial mechanism. However, with the political divisions as deep as they are, and the presence of two governments, let alone an HoR-approved budget for 2024 for the Government of National Stability (GNS), it is hard to see how such a unified budget can be agreed. International actors and the UN are likely to try to facilitate agreement around this issue, but it is unclear how much pressure they are willing or able to apply to force progress on this matter. In the short term, it is more likely that there will be a windfall of funding and access to USD for all key actors, dampening the political tussle over the bank and oil revenues for a little while. However, in the longer term, this will not be sustainable and either an agreement over spending will have to be reached, or a fresh crisis or conflict will inevitably erupt.
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5+5 Joint Military Committee meets in Sirte with international participation
Incident: On 15 October, PC head Muhammed al-Menfi received the members of the 5+5 Joint Military Committee (JMC) to discuss the results of the previous 5+5 JMC meeting and his proposals for the upcoming meeting on 17 October in Site, including practical steps to unify the military institutions and practical steps to improve coordination between the military parties.
On 17 October, the 5+5 JMC took place in Sirte under the co-chairmanship of acting UN Envoy Stephanie Koury and the French Ambassador Mostafa Mihraje. The ambassadors of Italy, Turkey, and the UK - all members of the Berlin Process Security Working Group - also participated. The main focus of the meeting was the supervision of the ceasefire and efforts to unify the military establishment.
Production reaches 1.33 million bpd; NOC pushes ahead with efforts to raise production further
Incident: The NOC has successfully returned production to pre-shutdown levels with several maintenance and production-increase operations adding additional barrels. On 20 October, the NOC said that production of crude and condensates had reached 1.328 million bpd and 193,690 barrels of equivalent gas. Exports of crude have also reportedly risen to over 1 million bpd in the last few days.
On 20 October, Akakus Oil Company said production rates at the Sharara field had reached 274,365 barrels per day—figures that have not been achieved in more than three years. On 21 October, the technical teams of the Arabian Gulf Oil Company (AGOCO) completed the mechanical connection works for the two wells (K-7, K-9) in the (K) area of the Nafoura field. Their production capacity is expected to reach 3,500 barrels per day.
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5+5 Joint Military Committee meets in Sirte with international participation
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