Financial crisis for Libya’s parallel government in the east

Reuters reported that the Libyan government based in the east has sold bonds worth more than $23 billion (around 32 billion Libyan dinars) to fund its wage bill, bypassing the central bank in Tripoli and creating a potential financial black hole if the countryand creating a potential financial black hole if the country reunifies.

The proceeds of the sales are used to pay eastern state employees via local banks, in large part using dinars printed in Russia.

In Tripoli, the U.N.-backed authorities and central bank control an annual budget worth $29 billion, but they only partly fund the east, mainly paying wages of public employees hired before 2014.

But since then, the east has hired thousands of soldiers as well as public servants to staff its new ministries.

Therefore, to cover the wage, the east has raised $23 billion since 2014 via bonds, bypassing Tripoli.

Reuters quoted diplomats that said that as the east is suffering a shortage of banknotes, its central bank has had billions of dinars printed in Russia – cash that has been used to pay wages and interest on the bonds.

Via Reuters