November 4, 2011
Libya will wait until a new government is in place before pushing for the release of more Libyan assets frozen abroad, an official with the country’s stabilization group said.
“We are in a comfortable financial situation for the next nine months, so we decided it’s best to wait” until Libya regains political stability, Wafik Shater, head of financial affairs for the group, said in an interview in Dubai.
So far, about $1.5 billion of the $170 billion held abroad by the Libyan central bank and the Libyan Investment Authority, the country’s sovereign-wealth fund, has been unfrozen to help the National Transitional Council pay for fuel, salaries and civilian needs.
Abdurrahim el-Keib, an electrical engineering professor who lived in the U.S. for 10 years, was named Libya’s interim prime minister in Tripoli on Oct. 31. He said he will select a cabinet within two weeks. Under current plans, Libyans will choose a panel to oversee the writing of a new constitution within eight months. That will be followed by a referendum and presidential and legislative elections.
El-Keib takes over from Mahmoud Jibril, who resigned as he had promised when Libya’s “liberation” was declared on Oct. 23, three days after the death of Muammar Qaddafi and the fall of the former leader’s hometown of Sirte to NTC forces.
Libya’s economy suffered as much as $15 billion in damage during the conflict, which began in the eastern city of Benghazi in February, according to Farhat Bengdara, the former central bank governor. The International Monetary Fund said last week that the economy will contract more than 50 percent this year after fighting paralyzed its oil industry.
About $34 billion of Libyan assets were frozen by the U.S., which has released more than $700 million. France has said it will unfreeze 1.5 billion euros ($2.1 billion), and the United Nations Security Council on Aug. 30 approved Britain’s request to release $1.6 billion of Libyan assets held in U.K. banks.
In addition to the $170 billion in assets abroad, $20 billion has remained in Libya’s domestic banking system, Shater said last month. The government found billions of dollars of local currency abandoned by Qaddafi’s regime in the central bank. The cash will help meet the country’s needs for months, Shater said.
‘Checks And Balances’
“The new government doesn’t have the checks and balances, accounting control, and accountability to handle the flow of large sums of money,” said Paul Sullivan, an economics professor and North Africa expert at the National Defense University in Washington. “It could take many years, if ever, for Libya to develop the sorts of budget and cash-flow controls that are required to keep things in check.”
The transitional government sees no need to seek aid from the World Bank or the International Monetary Fund, Shater said.
Libya’s oil output, at about 1.58 million barrels a day before the revolt according to Bloomberg data, slumped to a trickle after fighting broke out, the International Energy Agency said. Shater said last month he expects the country to resume pre-conflict levels by the end of 2012.
Eni SpA and OAO Gazprom Neft, the oil arm of Russia’s gas export monopoly, resumed production at their project in Libya about two weeks ago, Mikhail Margelov, the Russian presidential envoy to Africa and the Middle East, said today.
Photo by: Reuters/Ismail Zetouny