A gradual currency devaluation is the only effective solution to Libya's acute cash crunch, the country's deputy prime minister, Ahmed Maiteeg, said on Thursday.
Libya has strict limits on access to foreign currency, creating shortages of cash and a flourishing informal market, where the exchange rate is less than a quarter of the official rate, 1.4 dinars to the dollar.
Maiteeq is part of Libya's UN-backed Government of National Accord, which has been pushing for a devaluation of the dinar for a while. The central bank opposes such a move.
"We are still in discussion with the central bank on the exchange rate - they had different views on how to solve this problem," Maiteeg told reporters on the sidelines of a Libya investment conference in London. "One of the solutions would be changing the exchange rate but doing it gradually, not suddenly," he said. "As of now, the situation in Libya does not allow us to do something with interest rates. The only available solution that can be effective is the exchange rate."
Maiteeg added authorities were also looking at other options, such as making money transfers via mobile phones. Such solutions had proved effective in other countries.
Libya is almost entirely dependent on oil revenues, and last year's plunge in oil earnings pushed the economy towards collapse. More than five years after the overthrow of Muammar Gaddafi, the UN-backed government has made little headway towards ending political turmoil and armed conflict.
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