After years of political instability and economic decline, Libyans are now contending with a sharp blow to their already strained purchasing power following the sudden devaluation of the national currency. The recent move by the Central Bank of Libya has added fuel to an already volatile economic situation, intensifying hardships for ordinary citizens and widening the cracks in a fragile financial system.
The devaluation, which saw the official exchange rate of the Libyan dinar drop by 13.3 percent, marks the second such move in five years. The rate shifted from 4.48 to 5.56 dinars against the US dollar, while in the country’s thriving black market, the rate surged even higher from 6.90 to 7.80. For many Libyans, particularly small business owners and traders who rely on foreign currency to import goods, the impact has been immediate and unforgiving. Prices for essential items have soared, squeezing household budgets that were already stretched to the limit.
Despite its wealth in oil Libya holds the largest proven hydrocarbon reserves in Africa the country’s economy remains hollowed out by more than a decade of internal strife. The 2011 NATO-backed uprising that ousted longtime ruler Moamer Kadhafi left behind a fractured nation with two competing governments: a UN-recognized administration based in Tripoli, and a rival faction in the east backed by military commander Khalifa Haftar. This division has not only crippled national governance but also severely undermined economic planning and financial discipline.
The financial strain of dual administrations, each pursuing its own agenda and spending policies, has placed unsustainable pressure on the country’s fiscal system. Public expenditures have ballooned, driven by overlapping bureaucracies, competing loyalties, and a general absence of coordinated governance. It is this environment rather than just the central bank’s decision that analysts say has laid the groundwork for the dinar’s devaluation.
The Libyan economy is heavily reliant on imports, including food, medicine, and consumer goods, making the devaluation especially painful. Without a strong domestic manufacturing or agricultural sector, Libya’s dependence on foreign goods means that even modest shifts in the exchange rate can have dramatic effects on the cost of living. The country’s oil revenues, its primary source of foreign currency, have also suffered from disruptions and underperformance, remaining below pre-2011 levels.
In response to the currency crisis, the United Nations Support Mission in Libya (UNSMIL) has issued a call for urgent action. The UN expressed concern over the rising cost of living and the deepening mistrust among citizens toward state institutions. The warning comes amid a growing wave of public anger. Protests have erupted in Tripoli, where demonstrators recently gathered outside the central bank to voice frustration over the worsening economic conditions.
While much of the public anger has been directed at the central bank, economic experts argue that this focus is misplaced. The bank, they suggest, is operating under extraordinary pressure in a deeply politicized environment, where it has little control over national expenditure or policy direction. Years of division have weakened institutional checks and balances, and until recently, even the central bank itself was split between rival branches, each operating under different authorities and issuing currency separately.
The current governor, appointed through a UN-brokered compromise, inherited a deeply dysfunctional institution. Analysts view the bank’s recent actions as desperate but necessary measures aimed at stabilizing the country’s financial footing. With oil revenues faltering and public debt swelling, the devaluation was seen by some as a last-ditch attempt to prevent a total financial collapse.
Observers argue that blaming the central bank for Libya’s economic unraveling oversimplifies a far more complex crisis. The root cause, they say, lies in years of unchecked public spending, weak governance, and the absence of a unified national budget. Political leaders from both factions have reportedly approved unprecedented levels of expenditure without corresponding reforms or accountability.
As the value of the dinar continues to slide and everyday goods become more expensive, Libyans find themselves caught in the crossfire of a political impasse that shows few signs of resolution. The country’s wealth in natural resources has so far failed to translate into economic stability or improved living standards for its people. Without immediate and coordinated intervention not just from the central bank, but from political leaders on both sides of the divide Libya’s economic crisis may only deepen, threatening the fragile prospects for national recovery.
