December 19, 2017 / 7:02 PM / 3 months ago

UPDATE 1-Eastern Libyan parliament approves new central bank governor

(Adds statement from Tripoli central bank)

By Ayman al-Warfalli and Ahmed Elumami

BENGHAZI/TRIPOLI, Libya, Dec 19 (Reuters) - Libya’s eastern-based parliament approved a new central bank governor on Tuesday, deputies said, cementing financial divisions as the country grapples with political turmoil and economic crisis.

Libya, an oil producer, has two governments as a result of a power struggle waged since the toppling of Muammar Gaddafi in 2011 - a U.N.-backed government in Tripoli and an eastern-based administration allied to the House of Representatives.

The Tripoli-based central bank rejected the move by the eastern-based parliament.

The east has set up a separate central bank branch issuing its own banknotes in competition with the headquarters in Tripoli headed by Sadiq al-Kabir.

The House of Representatives based in Tobruk approved as new governor Mohamed Abdelsalam al-Shukri by a vote of 54 of 107 MPs attending, deputies said. Shukri is a veteran central banker who served in the central bank under Gaddafi.

“He will replace Sadiq al-Kabir,” said deputy Khalifa al-Dairi. The lawmakers dismissed Kabir in 2014, but he refused to leave, so they appointed his deputy Ali Salim al-Hibri as head of the eastern bank, which Shukri will now run.

The House of Representatives is the internationally recognised parliament, but is caught up in the greater conflict. It was elected in 2014 with a mandate of just 15 months and has been gripped by divisions. Only a fraction of its originally planned 200 lawmakers attend sessions.

It has not approved the Tripoli government and has allied itself with the eastern military commander, Khalifa Haftar, who on Sunday declared the administration set up through a U.N. mediation deal to be obsolete.

The Tripoli central bank said in a statement rejecting Tuesday’s appointment that it was committed to implementing the U.N. deal. It asked that the central bank be kept out of the conflict.

Western powers fear the central bank division will make it more difficult to resolve a cash crisis — loss of oil revenues and the reluctance of rich people to deposit money in insecure banks are making banknotes scare across Libya.

The Tripoli-based government had called on Hibri and Kabir on Monday to urgently work together to solve the economic crisis. (Reporting by Ayman al-Warfalli and Ahmed Elumami; Writing by Ulf Laessing; Editing by Larry King and Gareth Jones)

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