Bread Crisis: Libya’s Central Bank Rejects New Letters of Credit for Flour

Governor of the Central Bank of Libya (CBL) Al-Siddiq Al-Kabeer emphasised that the letters of credit, which were opened in 2020 for the supply of flour, were appropriate for the amounts consumed in Libya.

In response to the Head of Presidential Council, Fayez Al-Sarraj’s regarding requests for new letters of credit to import flour, the Governor of the Central Bank of Libya (CBL) Al-Siddiq Al-Kabeer has on Sunday issued a statement.

Al-Kabeer emphasised that the letters of credit, which were opened in 2020 for the supply of flour, were appropriate for the amounts consumed in Libya.

The General Union of Bakers in Tripoli shut down all bakeries in the city on Saturday, citing an increase in the price of ingredients. This move was justified by the union’s head, Saeed Boukhreiss who claimed the new prices were necessary due to the new prices of flour being linked to lack of supply by the mills’ company.  

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The Governor explained that the PM’s call represents a grave breach of the country’s financial law and public spending controls, stipulated in the 2015 Libyan Political Agreement (LPA). He further stated that the state’s balance of foreign exchange with the Libyan Foreign Bank (LFB) is linked to sovereign revenues.

Al-Kabeer also countered rumours suggesting that it had opened letters of credits for importing unnecessary food items.

He further reminds the GNA officials on their obligation to control the country’s borders and ports to curb the smuggling of subsidised goods, especially flour and fuel.

Bakeries reopened Monday after the Bakers’ Union reached an agreement with the control authorities. Bread prices have been impacted largely by flour shortage, the prices of wheat which increased globally by 40% and the new exchange rate of the Libyan dinar to U.S. dollar on the confectionary sector. Bakeries may face dire straits in the coming months if state authorities do not resolve the problem satisfactorily.

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In 2018, inflationary pressure and dwindling oil prices among other factors saw bakeries in Tripoli abruptly shut for two weeks, thereby triggering a food crisis around bread – a staple for many Libyans.

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