January 29, 2018 / 6:44 PM / 10 months ago

Libya's eastern parliament swears in new central bank governor

BENGHAZI, Libya, Jan 29 (Reuters) - Libya’s eastern-based parliament swore in a new central bank governor on Monday, though the head of a rival assembly in the capital, Tripoli, quickly rejected the move.

The leadership of the Central Bank of Libya (CBL) has been divided since 2014, when rival political factions established competing governments in Tripoli and the east of the country.

The eastern-based parliament, or House of Representatives (HOR), set up a parallel central bank in the eastern town of Bayda, voting to dismiss Tripoli governor Sadiq al-Kabir.

After backing Kabir’s former deputy Ali Salim al-Hibri to run the bank in Bayda, in December the HOR elected Mohamed Shukri as the new governor.

As he was sworn in on Monday, Shukri spoke of reuniting the CBL and working to emulate the National Oil Corporation (NOC), which has overseen a sharp increase in production despite continuing political divisions.

“Today is the day of unifying the central bank which was divided and that has divided spending and monetary policy,” Shukri told lawmakers. “We suffered from problems that you are aware of and we promise to work in the same context as the National Oil Corporation to achieve development and welfare for the Libyan people.”

However, it remains unclear what role Shukri can play since Kabir has shown no sign of leaving his post and has continued to control oil revenues, the source of nearly all Libya’s income, as well as most spending across the country.

Abdulrahman Swehli who heads Tripoli’s State Council, a rival assembly to the HOR, called the vote “another jump in the air ... that will be doomed to failure”. There was no immediate comment from the central bank in Tripoli.

Shukri’s swearing-in comes as the Libyan dinar has made strong gains on the parallel market, rising to less than five dinars to the dollar in recent days from around nine dinars to the dollar at the end of 2017.

The partial recovery of the dinar may ease some political pressure on Kabir, who has faced growing calls to devalue the dinar from the official rate of 1.3 to the dollar, as the dinar slid in value over the past two years.

Currency traders and economists have attributed the dinar’s gains in part to Kabir launching a programme for citizens to claim $500 in foreign currency at the official rate, widening the options for accessing and transferring dollars, and promising to ease restrictions on dollar allowances for importers. (Reporting by Ayman al-Warfalli and Ahmed Elumami; Writing by Aidan Lewis; editing by Ralph Boulton)

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