This week, two important decisions were taken that will positively affect the economy and create momentum towards unifying the national financial institutions. On 3 February 2021, the Council of Ministers promulgated a two-month interim budget for 2021. This is the first time since 2014, Libya has one unified national budget.

Agreement on the budget was reached through the good offices of the United Nations Support Mission in Libya (UNSMIL), with the support of international financial institutions and the Economic Working Group of the Berlin Process, as they brought together relevant parties from both sides of the country to work out an agreement. The parties agreed to a two-month budget rather than a full year to allow for the newly formed unified executive to decide on the full budget for 2021.

The unification of the budget followed the Board of Directors of the Central Bank of Libya (CBL) decision on 1 February to allocate a no-interest loan to Libyan commercial banks in order to reduce the backlog in uncleared cheques. This decision will not address the underlying cause of what is known as credit crunch, but it will reduce pressure on the banking system.

These two reforms in addition to the recent unification of the exchange rate of the national currency, the reactivation of the CBL Board and progress made in the financial review of the CBL and the Libyan Investment Authority are all vital components of reforms needed to regularize the management of Libyan oil revenue. UNSMIL hopes that with a newly unified executive recommitted to working for the country’s national interests and restoring its sovereignty, Libya would be able to move closer to an equitable management of its oil resources for the benefit of all Libyan people.