$4 billion of subsidised goods, mainly fuel, smuggled from Libya to Tunisia, Malta, Niger, Chad and Sudan

Published: October 13, 2015 at 9:12pm

This report, published yesterday in the Libya Herald, is reproduced verbatim below.

CENTRAL BANK ACTS ON SUBSIDY REMOVAL
– Libya Herald

Tunis, 12 October 2015:

At a meeting today the Central Bank of Libya (CBL) agreed action to removed direct subsidies on fuel, stable foodstuffs and medicines. Prices at pumps and in shops will rise over a period of a year or more to market rates and, instead, payments of between LD 70 and LD 120 will be made into the bank accounts of every Libyan over the age of 18.

The move is expected to hit smugglers, saving Libya the equivalent of $4 billion a year as a result of subsidised goods being smuggled to neighbouring countries.

The Central Bank is overseeing the process in cooperation with the civil registry authorities. Both the House of Representative and the General National Congress as well as the Thinni government and the Ghwell administration in Tripoli had previously but separately agreed it.

Of the $4 billion-worth of subsidised goods – smuggled to Tunisia, Malta, Niger, Chad and Sudan – fuel accounts for 70 to 80 percent. Flour is also a major smuggled subsidised item. On a per capita basis, Libya is said to be the biggest importer of flour in the world, importing the equivalent of 200 kilogrammes per person per year. Other subsidised goods include sugar, tea tomato paste, vegetable oil, salt, rice and pasta.

The upper figure of LD 120 to be paid into people’s bank accounts will depend on whether subsidies on electricity are also phased out. If not, the payment is expected to be set at around LD 70.

The ending of direct subsidies – Libya spends some LD 12 billion a year on them – is expected to start coming into effect in three months’ time. “The development of the national ID number has now allowed this to happen,” an official who has been involved in the plans told the Libya Herald.

It will see petrol at the pumps rise from 150 dirhams (15 girsh or piastres) initially to 20 or 25, he said, adding that it would not go over 400 dirhams within the first year of being implemented.

“This way the money will go directly into Libyan pockets,” the official explained. It would, he added, benefit those with large families. Heads of families with children under 18 would be paid a percentage of individual allowance to cover each child.

The CBL is to discuss the subsidies with organisations involved such as the NOC and GECOL. In the case of the latter, there are concerns that even of people are given a subsidy towards payment of their electricity bills, many will not, as is the case now, pay them.