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🛒 تسوق الآنBen Sharada: Controlling Public Spending Key to Solving Libya's Exchange Rate Crisis
Ben Sharada: Controlling Public Spending Key to Solving Libya's Exchange Rate Crisis
Libya's exchange rate crisis requires deep structural reforms, not just Central Bank policy adjustments, warns senior State Council member
Libya's foreign exchange crisis will not be resolved by monetary policy alone — the solution lies in addressing deep structural fiscal imbalances, according to Saad Ben Sharada, a member of the Libyan State Council (Advisory). In a statement published on July 26, 2026, Ben Sharada emphasized that controlling public spending, diversifying revenue sources, and strengthening coordination between fiscal and monetary policy are the fundamental prerequisites for stabilizing the Libyan dinar.
The Structural Roots of the Crisis
Speaking after a meeting with a number of economic specialists, Ben Sharada noted that despite differing perspectives, there was consensus among participants that the heart of the exchange rate crisis is not located within the Central Bank of Libya (CBL) alone. Rather, the core problem stems from the massive expansion of government expenditure against the country's near-total dependence on oil revenues as the primary source of income.
Libya has relied on hydrocarbon exports for over 90% of its public revenue for decades, leaving the economy dangerously exposed to oil price volatility and production disruptions. When oil revenues decline, the government struggles to fund its expansive budget, putting downward pressure on the dinar through increased money printing and parallel market speculation.
The Missing Budget Law Since 2014
Ben Sharada highlighted a critical institutional failure: Libya has not had a unified budget law since 2014. This prolonged absence of a legal financial framework has meant that public spending operates outside any clear, consolidated fiscal structure. Without a unified budget, the country's competing governments and institutions have engaged in uncoordinated spending, further fragmenting economic governance and undermining the Central Bank's ability to manage monetary policy effectively.
The lack of a single, legally binding budget has also enabled parallel spending channels, with different state entities committing expenditures without centralized oversight. This has expanded the money supply beyond what the real economy can absorb, fueling inflation and eroding purchasing power for ordinary Libyans.
Fiscal-Monetary Coordination as a Prerequisite
According to Ben Sharada, the Central Bank of Libya is tasked with designing and implementing monetary policy, but the success of this mission depends entirely on the existence of a clear fiscal policy and a budget law that the state can rely upon. He stressed that monetary tools alone — including foreign exchange auctions and reserve requirements — cannot stabilize the currency if government spending remains unanchored.
Effective coordination between fiscal authorities and the Central Bank requires transparent data sharing, aligned policy objectives, and a unified executive vision. This has been a persistent challenge in Libya's fragmented political landscape, where different institutions answer to different political centers of power.
Revenue Diversification: Beyond Oil
The State Council member also called for diversifying national revenue sources to reduce dependency on oil. Libya possesses significant potential in sectors such as tourism, agriculture, renewable energy, and digital services — all currently underdeveloped due to years of instability and underinvestment.
Revenue diversification would not only cushion the economy against oil shocks but also reduce the fiscal pressure that drives deficit spending and currency depreciation. Ben Sharada argued that any genuine reform plan must include a clear roadmap for developing non-oil revenue streams alongside expenditure control measures.
Implications for Libyan Citizens
The exchange rate crisis has had a direct impact on the daily lives of Libyans. As the dinar loses value on the parallel market, the cost of imported goods — from food staples to medicine and construction materials — has risen sharply. Inflation has reduced real wages and eroded savings, while businesses struggle with uncertainty around currency availability and pricing.
Ben Sharada's analysis suggests that without structural fiscal reform, these economic hardships will persist regardless of who manages the Central Bank or what monetary tools are deployed. The message is clear: Libya needs a comprehensive economic reform strategy that begins with fiscal discipline, institutional coordination, and a break from the oil revenue monoculture.
— Libya Press / Politics Desk
