Libya’s central bank has officially devalued the national currency for the first time in four years, adjusting the exchange rate to 5.5677 dinars to the US dollar, effective immediately. The move represents a 13.3% devaluation from the previous official rate of 4.48 dinars per dollar, which had been in place since 2020.
The devaluation brings the official rate closer to the black market value, which currently stands at around 7.20 dinars to the dollar. This gap has persisted due to ongoing political and economic challenges in the country.
Last September, the dinar experienced significant pressure in the parallel market amidst a political standoff over the control of the central bank. The dispute, which severely disrupted oil production and exports—the country’s primary revenue source—was eventually resolved through a United Nations-brokered agreement between Libya’s rival eastern and western political factions. This agreement led to the appointment of a new central bank governor.
In an effort to ease currency access and stabilise the exchange market, the speaker of the eastern-based parliament announced a reduction in the foreign currency purchase tax from 20% to 15% in November. This tax is applied when individuals buy foreign currencies from commercial banks.
Libya’s economic woes are closely tied to its political fragmentation. Since the 2011 NATO-backed uprising, the country has remained divided, with rival governments operating in the east and west. This ongoing division continues to hinder national financial planning and budgeting.
In a statement released on Sunday, the central bank revealed that the combined spending of both administrations in 2024 had reached 224 billion dinars (approximately $46 billion), including 42 billion dinars allocated to crude-for-fuel swap deals. Public debt has also climbed to 270 billion dinars and is expected to surpass 330 billion dinars by the end of 2025 due to the continued absence of a unified national budget.
In December, Stephanie Koury, Deputy Head of the United Nations Support Mission in Libya, called on Libyan leaders to urgently establish a coordinated financial framework for 2025. She stressed the importance of agreed limits and proper oversight to prevent further fiscal instability.