Being the banking sector a fundamental pillar for the
development of the private sector in any market oriented
economy, the Libyan Government, alongside the financial
authorities of the country (i.e. the Central Bank of Libya)
is promoting a reformist program to strengthen it.
The key element of the State's banking structure is
the Central Bank of Libya (CBL), the monetary authority
in The Great Socialist People's Libyan Arab Jamahiriya,
100 per cent state-owned but at the same time enjoying
the status of autonomous corporate body. The law establishing
the CBL stipulates that the objectives shall be to maintain
monetary stability in Libya and to promote the sustained
growth of the economy in accordance with the general
economic policy of the State. The already mentioned
devaluation of the dinar in January 2002 and the progressive
dismantle of the foreign exchange controls have been
the most risky, courageous though necessary measures
that the CBL's authorities have taken in order to modernize
the Libyan economy as a whole, and linking it to the
world's economy, encouraging foreign investment and
enhancing foreign trade.
Libya has five state-owned commercial banks and only
one privately owned, plus several development banks.
Although competition is yet to emerge between them,
recent measures were taken to develop liberalisation
in this sector. For example, private sector clients
no longer have to work through the large state-owned
monopolies, and the commercial banks are free to establish
banking relations abroad, as long as they fulfil certain
requirements.
If we talk about banking in Libya, we cannot miss the
most prominent institution, the state-owned Libyan Arab
Foreign Bank. Created in 1972 to manage Libyan investments
abroad, it has expanded its influence and prestige overseas
(more than 30 subsidiaries abroad) and created an asset
network of US$ 12 billion, with a capital increase of
3 billion more expected for the next five years. |
As its chairman,
Mr. Mohammed H. Layas states: The
Libyan Arab Foreign Bank is considered one of the
most important institutions in the Arab world. We are
playing an important role to assist all the foreign companies
that are operating in Libya and some of them have already
open their account in our bank". No wonder why. Apart
from being the strongest financial institution in the
country, it has experience: "During the embargo era
we were the only institution that could handle foreign
accounts. This has given us a good international image",
says Layas.
But one of the major complaints of the foreign investors
is the difficulty to find attractive loans in the local
banking market and the lack of financial guarantees
to this investment. Mr. Layas wants to keep things clear:
"There are many foreign companies who came long
time ago and have successful business here. Foreign
investors have to be patient, because this is new for
us. We have strong values and they have to respect them
but Libya can offer very good opportunities for the
foreign investors who are willing to come here to establish
a long term relationship."
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