Libyan Arab Jamahiriya Banking Sector Grapples with Compliance Challenges
The World Bank has released a report highlighting the significant compliance challenges facing Libya’s banking sector. The report reveals that the financial resources provided by domestic money banks to the private sector as a share of total deposits have been consistently low in recent years.
Low Bank Credit to Deposits
As of the latest available figures, bank credit to bank deposits stood at just 31 percent in Libyan Arab Jamahiriya, well below the global average. This raises concerns about the ability of the country’s banking system to provide adequate financing to its private sector, hindering economic growth and development.
Steady Increase in Deposits
Total deposits in deposit money banks have been steadily increasing over the years, reaching 15 billion USD in 2020. However, this growth has not translated into increased lending to the private sector, suggesting that the banking system may be facing significant compliance challenges.
Lack of Transparency and Accountability
Experts point to a lack of transparency and accountability within Libya’s financial institutions as a major contributing factor to the compliance issues. “The absence of robust regulatory frameworks and effective supervisory mechanisms makes it difficult for banks to manage risk and comply with international standards,” said a leading economist.
World Bank Recommendations
The World Bank has called on Libyan authorities to take immediate action to address these challenges, including:
- Strengthening regulatory oversight
- Promoting financial inclusion
- Improving transparency and accountability within the banking sector
Failure to do so could have far-reaching consequences for the country’s economic stability and development prospects.
New Banking Supervision Framework
In related news, Libya’s central bank has announced plans to launch a new banking supervision framework aimed at improving compliance and reducing risk within the sector. The move is seen as a positive step towards addressing the country’s banking sector challenges, but experts warn that much more needs to be done to restore confidence in the system.
Conclusion
The Libyan Arab Jamahiriya banking sector faces significant compliance challenges, including low bank credit to deposits and lack of transparency and accountability. The World Bank has called on Libyan authorities to take immediate action to address these challenges, and a new banking supervision framework is being launched to improve compliance and reduce risk within the sector. However, much more needs to be done to restore confidence in the system and promote economic growth and development in the country.