Libyan govt approves $31.4 bln for 2011 budget

RABAT, June 15 Wed Jun 15, 2011 10:29pm BST

RABAT, June 15 (Reuters) - Libya's government approved a $31.4 billion budget for the rest of 2011, the official news agency said on Wednesday, a move apparently aimed at showing it was functioning as normal despite air strikes and sanctions.

Jana said the funds would "provide the necessary financial sources to cover the state's expenditure for the rest of the year" and would be distributed to the country's 22 districts.

It said just under half of the total 37.65 billion dinars ($31.4 billion) would be used to pay salaries.

It appeared to be an attempt by Muammar Gaddafi to show his government was still solvent despite a civil war pitting his forces against rebels looking to end his 41-year rule.

Libya's former central bank governor Farhat Bengdara, who defected in March was quoted this week, as saying the Gaddafi government had just $500 million left in cash at the end of February, although it still held about 155 tonnes of gold bars.

An International Monetary Fund report put Libya's net foreign assets held by the central bank and the sovereign wealth fund at $150 billion at the end of 2010.

Some of these assets were abroad and have been seized as part of sanctions against Libya.

That still leaves Gaddafi with a large pile of currency, but with no new foreign exchange coming in from the sale of oil -- which is also blocked by sanctions -- those reserves will dwindle. (Reporting by Joseph Nasr and John Irish; Editing by Alison Williams)