Benghazi Central Bank rebuffs government allegations, demands opening bank clearing

The Central Bank of Libya, Benghazi, issued a clarification regarding the statements of the Prime Minister of the Unity Government, Abdel Hamid al-Dabaiba, in which he said that the clearing system had not been opened due to the continuation of works that he called “cashing out on credit” from the balances of commercial banks and that the debts that were taken in the eastern region were in the form of bonds and checks not covered by the Central Bank.

According to the Central Bank’s statement, the bonds issued by the interim government in return for financing its expenditures in previous years were issued in accordance with the budget laws issued by the House of Representatives, knowing that the clearing has been closed since 2014 before the public debt occurred, in addition to the fact that the bonds issued by the Ministry of Finance of the interim government are legal bonds from a government approved by the House of Representatives and based on financial arrangements and settlements reviewed and matched by Deloitte International Audit Office according to the Benghazi Central Bank.

The Central Bank continued in its statement that this debt is in exchange for actual expenses, and that the Ministry of Finance and Planning of the Interim Government prepared its final accounts for the years 2015 to 2019, explaining how these funds were spent on salaries and expenses of the authorities, which are fully documented, stressing that the Central Bank of Libya in Al-Bayda has not distributed any amounts since the formation of Government of national unity to any party in respect of the political agreement and the approval of this government by the House of Representatives.

It added that the public debt is the result of a stifling economic crisis represented by the collapse of oil prices, the war on terrorism and the political conflict in the state, and all of these affect the exchange process for the resulting deficit through the “monetization of debt” mechanism, and therefore its accumulation on commercial banks is normal because most of it is salaries for citizens distributed among all commercial banks, it is assumed that it is a “government debt” free of risk, and therefore it needs a financial settlement only, according to the text of the statement.

In its statement, the Central Bank demanded that clearing be opened unconditionally, which was requested by the specialized technical committee of the Central Bank of Libya, in addition to dealing with the public debt in previous years and clarifying the full truth about the total public debt in the two branches of the Central Bank in Tripoli and Benghazi.

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