Libya Enhances Regulatory Framework to Boost Economic Growth

Tripoli, Libya - In a significant move to strengthen its economy, Libya has enhanced its regulatory framework to promote economic growth and stability. The country’s investment authority, the Libyan Investment Authority (LIA), will now focus on making low-risk investments abroad to protect future generations’ share in the national wealth.

Regulatory Framework Enhancements

The LIA’s new law allows it to retain all its profits without transferring them to the government budget, giving it more flexibility to invest wisely and generate returns. The country’s central bank, the Central Bank of Libya (CBL), has also taken steps to improve its monetary policy framework by introducing new CDs with a 28-day maturity and establishing an overnight facility.

Monetary Policy Framework

The CBL’s efforts to enhance coordination between off-site and on-site supervision units have been praised by international experts, who have encouraged the authority to further strengthen its capacity building through additional staffing and training. The country’s banking system has also made significant progress in recent years, with foreign partners involved in six out of 16 operating banks.

Exchange Rate Regime

Libya’s exchange rate regime remains pegged to the Special Drawing Right (SDR), but experts say it is moderately overvalued due to distortions in the economy. However, they do not recommend a change in the current dinar/SDR level or the exchange regime until the CBL builds sufficient capacity to conduct an effective monetary policy.

Sovereign Asset Management Strategy

The country’s sovereign asset management strategy is also under review, with experts calling for a comprehensive approach to managing its foreign assets and developing operational benchmarks. The presence of different government funds has raised concerns about reputational risk, highlighting the need for a coordinated approach to asset management.

Banking System Modernization

In other developments, Libya has made significant progress in modernizing its banking system, with efforts underway to improve credit culture through specialized training and targeted awareness campaigns. The country’s financial market is also deepening, with foreign bank participation expected to increase competition and bring best practices to the Libyan banking sector.

Customs Reform Progress

The World Bank and the International Monetary Fund (IMF) have welcomed Libya’s progress in customs reform, which has led to efficiency gains and improved revenue collection. However, they have urged the country to continue simplifying tariffs, speeding trade facilitation, and moving to risk-based auditing and electronic information systems.

Conclusion

In conclusion, Libya’s efforts to enhance its regulatory framework and promote economic growth are significant steps towards a more stable and prosperous future. While challenges remain, the country’s progress in recent years has been impressive, and with continued reform and investment, it is well-positioned for long-term success.