TRIPOLI – Libya’s foreign currency sales have surged dramatically, far outpacing the country’s declining oil revenues, raising concerns over financial stability and foreign exchange reserves.
According to the Central Bank of Libya (CBL), between March 1st and 17th, 2025, the country sold $2.3 billion in foreign currency, while oil revenues—the backbone of Libya’s economy—were a mere $788 million during the same period. This stark imbalance signals growing financial pressure on the oil-dependent nation.
Foreign Currency Demand Surges Amid Economic Pressures
The CBL report highlighted that of the $2.3 billion in foreign currency sold:
- $1.1 billion was used for personal needs, including travel, education, and medical expenses.
- $1.2 billion was allocated to letters of credit for imports and business transactions.
This reflects the strong demand for foreign exchange, driven by economic uncertainty and the delayed and declining oil revenues.
CBL’s Warning on Fiscal Challenges
The Central Bank of Libya has raised concerns about the “great difficulties” facing the economy, attributing much of the strain to:
Declining and delayed oil revenues, reducing the government’s primary source of income.
Increased public spending due to fragmented fiscal governance, which has weakened financial oversight.
Growing reliance on foreign currency to meet domestic demand, further pressuring Libya’s foreign reserves.
Despite these economic headwinds, the CBL has reaffirmed its commitment to maintaining foreign currency availability in local markets while protecting long-term financial stability.
Record-Breaking Foreign Currency Usage in Early 2025
The data from January and February 2025 paints an even bleaker picture, showing a 395% year-over-year increase in foreign currency usage, reaching a record $5.53 billion.
- Personal spending accounted for 53.7% of this amount.
- Documentary credits—used for trade and imports—made up 43.1%.
Economic Implications and Future Outlook
The combination of soaring foreign currency demand and plummeting oil revenues is pushing Libya toward potential macroeconomic instability. If the trend continues, the country could face:
- Further depletion of foreign reserves, limiting the CBL’s ability to stabilize the economy.
- Higher inflation, as the Libyan dinar comes under pressure.
- Increased financial strain on businesses and consumers, particularly those reliant on imports.
Libya’s economy remains heavily dependent on oil, and without a recovery in oil production and revenue collection, the country could struggle to maintain fiscal stability in the coming months.
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