The Libyan east-based Interim Government has sold bonds worth more than $23 billion to fund its wage bill, bypassing the Central Bank of Libya in Tripoli and creating a potential financial black hole if the country reunifies, Reuters reported bankers and diplomats as saying.
Interim Government’s finance ministry has been selling the debt to a parallel Central Bank in the eastern city of Al-Bayda and the proceeds of the sales are used to pay eastern state employees via local banks, in large part using dinars printed in Russia.
The accumulating debt has been on the rise since 2014, when the country split into two rival governments — one in Tripoli and the other in the east.
“To cover the wage bill and fund its army, which has just fought a three-year battle for control of Benghazi, the east has raised 32 billion dinars ($23 billion) since 2014 via bonds, bypassing Tripoli.” Reuters unveiled.
The governor of the parallel central bank in Al-Bayda, Ali Al-Hibri, told Reuters in an interview in Benghazi that this year, bonds worth around 7 billion dinars will be issued.
“In order to charge annual interest of 3 percent on the bonds, the east suspended a general ban on such payments under Islamic law.” Reuters explained.