Libya’s central bank has officially devalued the national currency by 13.3%, setting the new exchange rate at 5.5677 dinars to the U.S. dollar, down from the previous rate of 4.48 dinars.
The change, effective immediately, marks the country’s first official currency adjustment since 2020.
The devaluation comes as part of ongoing efforts to stabilise Libya’s struggling economy, which continues to reel from more than a decade of political division and institutional fragmentation. The official rate remains far behind the black market, where the dinar currently trades at around 7.20 to the dollar, reflecting deep-rooted instability and waning public confidence in the financial system.
Libya’s economic woes are closely tied to its post-2011 political landscape. Following the NATO-backed ouster of Muammar Gaddafi, the country splintered into rival eastern and western governments, each operating separate budgets and central institutions. The situation deteriorated further in 2014, fuelling a prolonged power struggle that continues to complicate national policymaking.
In 2023, the dinar suffered a sharp plunge on the parallel market amid a power tussle over control of the central bank, which disrupted oil output—Libya’s primary revenue source. A UN-mediated agreement later that year led to the appointment of a unified central bank governor, easing tensions but not eliminating fiscal challenges.
Government spending reached 224 billion dinars ($46 billion) in 2024, including 42 billion dinars allocated to crude-for-fuel swap deals. Public debt has soared to 270 billion dinars, with projections suggesting it could exceed 330 billion by the end of 2025 without a unified national budget.
In a bid to relieve currency pressure, Libya’s eastern parliament reduced the tax on foreign currency purchases via commercial banks from 20% to 15% last November.
The United Nations has urged Libyan leaders to improve fiscal transparency and adopt a comprehensive national spending plan. Stephanie Koury, Deputy Head of the UN Support Mission in Libya, reiterated in December the need for “clear limits and oversight” in the country’s budgeting process.
The central bank’s latest move underscores the urgency of economic reform and political reconciliation. Whether the devaluation will stabilise the dinar and restore market confidence, however, remains to be seen.
