Cash shortage adds to weary Eastern Libyans' woes

From Ayman al-Warfali
BENGHAZI, Libya (Reuters) - When Jamal al-Fallah tried to withdraw money from his bank in Benghazi, he was told that there was no cash available. This is due to financial problems in eastern Libya, which exacerbate a cash shortage that has hit the whole country.
According to the parallel central bank set up by the authorities in Benghazi, eastern Libya is facing an impending crisis with debts in the tens of billions and local banks suffering as a result.
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Fallah was waiting outside Wahda Bank with a few other people and said he only showed up because it had recently been said that money would be available.
"When we go to the bank, they say there is no liquidity," Fallah said, adding that he manages to pay his daily bills by borrowing cash from a supermarket owner.
He didn't receive cash until a week later - his first receipt of his salary in months - and paid most of it to his landlord within an hour, he later said by phone.
Libya, once one of Africa's richest countries thanks to oil exports, has collapsed since its 2011 uprising and divided between rival governments in the east and west, including institutions like the central bank.
As the war between the Tripoli-based government of the National Agreement (GNA) in the west and the Libyan National Army (LNA) of Khalifa Haftar in the east has intensified in recent years, economic problems have also grown.
Difficult living conditions - including power outages and fuel shortages - have sparked protests in western and eastern Libya in recent weeks and increased political pressure on both sides in the conflict.
A blockade by the LNA on oil exports since January was lifted last month and revenue is gradually flowing back into the country, but it cost Libya more than $ 10 billion in lost income.
Oil revenues are paid to the Tripoli-based Central Bank of Libya, which then pays the salaries of most frontline state employees, including in areas held by the LNA.

The Eastern Central Bank has funded Haftar's war effort. It has raised money by selling government bonds to local banks, which central bank liquidity manager Ramzi Alagha said could exceed 40 billion dinars ($ 29 billion) so far.
Dinars printed in Russia were also imported.
Tripoli cut off the breakaway Eastern Central Bank from most clearing operations in 2014, adding to the problems of commercial banks when two parallel financial systems emerged.
Some people in the east are trying to switch to banking competitors in order to still have access to salary payments.
People often use checks instead of cash, but these sometimes bounce off when banks try to control their own cash flows. A man who tried to buy 30,000 dinars worth of land was told by the bank that he would have to make three separate payments over an extended period of time instead of paying all at once.
Checks in dollars can also be exchanged for different values ​​in eastern Libya, depending on which bank issued them.
"We have reached the point where banks can no longer raise funds, and this reflects the prices of goods that are under shortage," said Asam al-Abairesh, head of the Eastern Central Bank's payments department.
Both the western and eastern central banks are now subject to international scrutiny as part of the political process led by the United Nations to resolve the conflict with the aim of reuniting the Libyan institutions.

(Reporting by Ayman al-Warfali, letter by Angus McDowall; editing by Emelia Sithole-Matarise)

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