Libya starts using new exchange rate as economy struggles

Malik al-Fakhri, an electronics dealer in Benghazi, said he had stopped using banks after 2013 because he lost too much money importing at the official rate and turned instead to the black market.

“The most important thing for the trader is stability,” he said.

The new rate is an effective devaluation, meaning the cost of imported goods is likely to rise.

“This decision is a mistake that will harm citizens more than benefitting them and is only to satisfy traders,” said Hathem al-Barghathi, also in Benghazi.

The moves are part of a wider effort to resolve economic obstacles to peacemaking, encourage implementation of previously agreed reforms and hamper opportunities for corruption.

However, while fighting between the GNA and Khalifa Haftar’s eastern-based Libyan National Army (LNA) mostly stopped in June after the collapse of his assault on Tripoli, diplomatic progress towards a political solution has slowed.

A ceasefire agreed to in October in Geneva has been only partially implemented, with troops still occupying front-line positions, a main coastal road still closed and foreign mercenaries remaining in place.

Meanwhile, while the group of Libyans picked by the United Nations to plot a path towards democracy has set elections for the end of this year, they could not agree on a new unified government to oversee the transition period.