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🛒 تسوق الآنProtecting Libya's Economy: How the Central Bank's Emergency Powers Exposed Institutional Gaps
Protecting Libya's Economy: How the Central Bank's Emergency Powers Exposed Institutional Gaps
Central Bank of Libya member Ayub Al-Farsi argues emergency measures that saved the economy must now give way to proper institutional accountability
In a detailed analysis published by Sada Libya, Monetary Policy Committee member Ayub Al-Farsi addressed one of the most pressing questions facing Libya's financial landscape: did the Central Bank overstep its mandate during years of political division, or was it simply doing what was necessary to prevent economic collapse?
Al-Farsi's article, titled "Protecting the National Economy: How the State of Necessity Imposed Exceptional Roles on the Central Bank," offers a candid assessment of the Central Bank's expanded role during Libya's fractured governance period — and argues that the time has come to restore proper institutional boundaries.
The Ministry of Finance Is the Proper Authority
Al-Farsi begins by establishing a clear principle: the Ministry of Finance holds the constitutional mandate for budget management and financial reporting. The Central Bank's recent push to transfer financial disclosure responsibilities back to the ministry is not an act of "evasion," he insists, but a necessary step toward restoring correct institutional order.
"There is agreement that the Ministry of Finance is the original authority in budget management," Al-Farsi writes. "The Central Bank's recent position does not come from a place of shirking responsibility — it is a necessary step to return matters to their proper institutional framework."
How Emergency Measures Became the New Normal
During the height of Libya's political division, with competing governments and no unified budget, the Central Bank stepped into a void. It coordinated financial arrangements, facilitated unified spending agreements, and ensured salaries and basic services continued to reach Libyan citizens.
Al-Farsi acknowledges these measures were extraordinary — but insists they were never intended to become permanent. "The Central Bank's sponsorship of financial arrangements and unified spending agreements was not a desire to encroach on the Ministry of Finance's competencies," he explains. "They were exceptional measures imposed by a state of extreme necessity to prevent financial collapse resulting from governmental division."
These interventions, he says, were bridge-building efforts — not a permanent power grab.
Cash Flow vs. Accounting: A Critical Distinction
A central point in Al-Farsi's argument is the distinction between cash flow data and detailed financial accounting. The Central Bank, he notes, handles incoming and outgoing cash flows — it tracks the movement of money. But it does not maintain detailed accounting records, sectoral budgets, or the documentation required to verify the legality of expenditures.
"Publishing comprehensive and precisely classified data is a purely financial function," Al-Farsi states. "The Central Bank's continued leadership in this arena perpetuates institutional chaos rather than curing it."
That responsibility, he stresses, belongs exclusively to the Ministry of Finance and oversight bodies.
Currency Fees as Monetary Policy Tools
Al-Farsi also addresses proposals to impose fees on foreign currency sales — measures sometimes misinterpreted as taxes. He clarifies that such tools fall squarely within the Central Bank's mandate for monetary policy, currency defense, and inflation control.
"These are globally recognized tools in structural crisis conditions," he writes, noting that they become necessary when government fiscal policies fail to control public spending. The discussion, he says, is not about whether these measures are right or wrong — it is about jurisdiction and proper process.
Correction Starts Somewhere
The article concludes with a forward-looking call: the Central Bank's previous interventions were emergency measures to save what could be saved in the absence of unified budgets. Today, insisting that the Ministry of Finance fulfill its role in publishing data and governing expenditure is the beginning of actual correction.
"Continuing the exceptional error and making it a permanent rule does not build a state," Al-Farsi warns. "Returning to the rule of law and institutions — that is the path forward."
The opinion piece reflects growing internal debate within Libya's financial institutions about the balance between pragmatism and institutional integrity. As the country moves toward greater political stability, the question of who controls Libya's finances — and under what mandate — remains central to its economic future.
— Libya Press / Economy Desk
