Chapter

SOCIALIST PEOPLE’S LIBYAN ARAB JAMAHIRIYA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
Share
  • ShareShare
Show Summary Details
Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Libya is the Libyan dinar.
Exchange rate structure
DualEffective February 14, 1999, the Central Bank of Libya (CBL) legalized the parallel exchange market and allowed commercial banks to sell foreign exchange for transactions related to personal imports, travel, medical treatment abroad, and hajj and omra at the parallel exchange rate. On February 13, 1999, this rate stood at LD 3.20 per $1.
Classification
Pegged exchange rate within horizontal bandsThe Libyan dinar is pegged to the SDR at the rate of LD 1 per SDR 2.80. Margins of up to 77.5% are allowed around this fixed relationship. The dinar has been depreciated to the maximum extent permitted within those margins to LD 1 per SDR 1.577.
Exchange taxFees are levied on outward foreign exchange transfers for the purpose of financing the Great Man-Made River Project.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll settlements with Israel are prohibited. Settlements with other countries are made in convertible currencies.
Payment arrangements
Bilateral payment arrangements
OperativeAn agreement is maintained with Malta; outstanding balances are settled in convertible currencies every 90 days.
Administration of controlThe CBL administers exchange control and has delegated some powers to authorized banks. The General People’s Congress regulates policy on imports and exports, which is executed by the Secretariat of Planning, the Economy, and Trade (SOPET).
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may freely purchase, hold, and sell gold in any form other than bars.
Controls on external tradeThe CBL imports processed and unprocessed gold and precious metals; it also sells gold bars to domestic goldsmiths for manufacture at prices announced from time to time. The gold must be processed before it may be sold to the public. Unworked gold is subject to an import duty of 15%.
Controls on exports and imports of banknotes
On exports
Domestic currencyTravelers may not take out Libyan currency.
Foreign currencyNotes up to the equivalent of LD 300 may be taken out in a calendar year as a basic travel allowance. Additional amounts may be granted in special circumstances. Pilgrims to Saudi Arabia are entitled to a special quota. Temporary residents may take out any foreign currency notes that they had previously brought in and declared to customs. Foreign exchange converted into Libyan dinars by visiting tourists may be reconverted upon departure, with the exception of a minimum local expenditure of $50 for each day spent in the country.



Effective February 14, 1999, residents and nonresidents are allowed to export foreign currency bought from commercial banks.
On imports
Domestic currencyResidents and nonresidents are not allowed to import Libyan currency.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyIndividual residents are allowed to keep foreign currencies in domestic bank accounts and to transfer balances abroad without restriction. Exporters are allowed to retain foreign exchange earnings in a special account that may be used to finance imports of raw materials, spare parts, and machinery needed for export production. Effective August 25, 1999, no approval is required to open these accounts.
Held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.a.
Nonresident Accounts
Foreign exchange accounts permittedn.a.
Domestic currency accountsNonresidents who are gainfully employed in the country are permitted to open these accounts, which may be credited with their legitimate earnings. All other credits to nonresident accounts require the prior approval of the CBL.



Funds brought in by nonresident contractors undertaking contracts in their own names must be kept with an authorized bank. Payments received by contractors in respect of their contracts may also be credited to these accounts. Remittances from these accounts are subject to the prior approval of the CBL after submission of the prescribed evidence, but, in general, remittances are permitted up to the net-of-tax amount specified in the contract.
Convertible into foreign currencyThese accounts may be converted, but approval is required.
Blocked accountsNonresident-owned capital that is not permitted to be transferred abroad is credited to blocked accounts. With the approval of the CBL, funds in blocked accounts (with certain exceptions) may be used for expenditures in Libya, up to LD 500 a year, to cover the cost of visits by the owner of the funds or a close relative; for payment of legal fees and taxes; for remittances to the owner of the funds in his or her country of permanent residence (up to LD 1,000 in a calendar year); and for remittances in cases of hardship. When the funds have been in a blocked account for five years, they qualify, upon payment of due taxes, for remittance in full to the owner in his or her country of permanent residence. The blocked accounts of persons (with certain exceptions) who have left the country permanently are being released in installments.
Imports and Import Payments
Foreign exchange budgetYes.
Financing requirements for imports
Advance import depositsAuthorized banks may not open an LC without an advance import deposit equal to at least 20% of the value of the import.
Documentation requirements for release of foreign exchange for imports
Letters of creditBefore an LC is established, a marine insurance policy from a local insurance company must be submitted.
Import licenses used as exchange licensesExchange permits required for imports are readily granted by the authorized banks following central bank approval, provided that a firm contract exists and an import license has been obtained from the SOPET.
Import licenses and other nontariff measuresImports undertaken by state-owned enterprises do not require licenses if they are authorized within the annual commodity budget; other imports are subject to licensing. Resident firms undertaking development projects may import needed items not included in the annual commodity budget if the items are not available locally. Imports by nonresidents, however, must be financed with foreign exchange resources from abroad. With the exception of strategic goods (i.e., nine essential food items, medicines, insecticides, petroleum products, tobacco, and gold) retained by public corporations, all other goods may be imported by either public or private entities within the provisions of the annual commodity budget.
Negative listImports of mineral water, fruit juices, instant tea, certain types of coffee, green vegetables, poultry, preserved meats and vegetables, alcoholic beverages, peanuts, oriental rugs, soaps, envelopes, crystal chandeliers, toy guns, luxury cars, and furs are prohibited.
Other nontariff measuresAll imports from Israel are prohibited. Importers are required to deal directly with producers abroad and not through intermediaries.
Import taxes and/or tariffsImports are subject to customs duties and surcharges, the latter being 10% of the applicable customs duties. All products from Arab countries are exempt from customs duties, provided domestic value added is at least 40%.
State import monopolyA state-owned company controlled by the CBL has a monopoly over the importation of gold and precious metals.
Exports and Export Proceeds
Repatriation requirementsAll proceeds must be repatriated within six months of shipment.
Surrender requirementsExporters are allowed to retain up to 40% of nonhydrocarbon earnings.
Financing requirementsn.a.
Documentation requirements
Letters of creditAll exports require the opening of LCs.
Export licensesIn general, exporters do not need export licenses but must register with the Export Promotion Council and supply on a regular basis the relevant documentation on their exports. Exports of nonmonetary gold (other than for processing abroad), scrap metals, eggs, chicken, fish, olive oil, paint, tires, steel, and tractors are prohibited. Exports or reexports of wheat, wheat flour, crushed wheat, barley, rice, tea, sugar, tomato paste, and macaroni, which are subsidized commodities, are prohibited. All exports to Israel are prohibited.
Without quotasExport licenses are required for raw wool, hides and skins, and agricultural products.
Export taxesn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPayments for invisibles related to authorized imports are not restricted. All other payments for invisibles, as well as payments in excess of the approval authority delegated to the banks, require the prior approval of the CBL.
Investment-related paymentsProfits generated by foreign capital invested in projects deemed to contribute to the economic development of the country may be transferred freely to the country of origin, provided that the paid-up capital is not less than the equivalent of LD 200,000 and that at least 51% of the shares are held by foreign nationals. Information is not available on the payment of amortization of loans or depreciation of direct investments.
Payments for travelForeign exchange allocations for travel were suspended in 1992. Effective February 14, 1999, residents are allowed to purchase foreign exchange for tourism from authorized banks without limits.
Prior approvalYes.
Foreign workers’ wages
Prior approvalNonresidents employed by the state, by state-owned enterprises, and by foreign companies may remit (1) up to 50% of their net salaries each month if their contracts do not specify that lodging, board, or both will be made available free of charge by the employer; or (2) up to 75% of their net salaries if their contracts specify that the employer will provide both lodging and board free of charge at work sites in remote areas. Staff of UN agencies, embassies, consulates, and medical institutions are exempt from these regulations.
Quantitative limitsYes.
Other payments
Prior approvalYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsAll foreign exchange receipts must be surrendered.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital and money market instrumentsPurchase abroad of these instruments by residents requires approval.
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsYes.
On money market instruments
Purchase abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsYes.
Controls on derivatives and other instrumentsn.a.
Controls on credit operations
Commercial creditsResidents must obtain prior CBL approval to borrow funds abroad.
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Financial credits
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign participation in industrial ventures set up after March 20, 1970, is permitted on a minority basis, but only if it leads to increased production in excess of local requirements, introduction of the latest technology, and cooperation with foreign firms in exporting the surplus production.
Controls on liquidation of direct investmentForeign capital invested in projects deemed to contribute to the economic development of the country may be transferred freely to the country of origin, provided that the paid-up capital is not less than the equivalent of LD 200,000 and that at least 51% of the shares are held by foreign nationals.
Controls on real estate transactions
Purchase abroad by residentsResidents must have prior permission from the Committee of the People’s Bureau for Foreign Affairs and International Economic Cooperation to purchase real estate abroad.
Purchase locally by nonresidentsYes.
Controls on personal capital movementsn.a.
Provisions specific to commercial banks and other credit institutionsn.a.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 1999
Exchange arrangementFebruary 14. A dual exchange rate market was introduced by legalizing the parallel market and allowing commercial banks to sell foreign exchange at that rate for authorized transactions.
Arrangements for payments and receiptsFebruary 14. Residents and nonresidents were allowed to export foreign currency bought from commercial banks.
Resident accountsAugust 25. No approval is required to open foreign exchange accounts.
Payments for invisible transactions and current transfersFebruary 14. Residents were allowed to purchase foreign exchange for tourism from banks without limit.

    Other Resources Citing This Publication