bank: Lost oil revenues have cost Libya $30 billion
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[June 06, 2014]
By Ulf Laessing
TRIPOLI (Reuters) - Libya
has lost $30 billion due to 10 months of protests at
oilfields and export terminals but has sufficient
foreign currency reserves to keep the country running, a
central bank official said.
A wave of protests at oil facilities has reduced the North African
country's oil output to less than 200,000 barrels a day down from
1.4 million bpd in July before the strikes started.
The protests are part of wider turmoil in the North African country
since the overthrow of Muammar Gaddafi in 2011. The government is
unable to control militias and armed tribesmen who helped oust
Gaddafi but now seize oilfields or state institutions at will to
make political or financial demands.
"The damages the state has now suffered after more than 10 months,
Libya has lost not less than $30 billion," Musbah Alkari, director
of the central bank's reserves department, told Reuters. Reserves
are currently around $110 billion, down from around $130 billion
last summer when protests started.
The situation could get worse in the next few days.
State oil firm National Oil Corp (NOC) said on Wednesday that it
might be forced to use crude from its two offshore oilfields, so far
unaffected by protests, to feed a domestic refinery. That could mean
Libya stops exporting oil for the first time since 2011.
Alkari said Libya was currently earning around $1 billion each month
in oil revenues, having brought in between $4 billion and $5 billion
a month before the oil protests started.
Oil and gas exports are the only source of revenue for the country's
$50 billion budget and to fund food purchases and other imports
worth $30 billion, as Libya has no sizeable industrial production
outside the oil sector.
"The reserves will last (cover the budget and imports) for three and
a half years ... (but) we want suitable solutions for these
problems," he said.
Alkari said there needed to be a political solution for the oil
crisis but did not elaborate.
A rebel group in eastern Libya has seized several oil export ports
to press for financial demands and regional autonomy.
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The government signed an agreement in April with the rebels to
reopen the ports but implementation has been slow due to mutual
distrust. The rebels have refused to deal with the new premier Ahmed
Maiteeq who was elected by parliament in a chaotic vote disputed by
Alkari said the central bank had diversified its foreign currency
reserves, which are split between cash, short-term deposits, foreign
bonds and equity stakes in banks and insurers.
Discussing the bank's little-known investment strategy, he said it
favored dollar bonds such as U.S. Treasuries as its oil is sold in
dollars. It also holds sovereign or other highly rated bonds from
European countries and stakes in companies including Italy's
UniCredit, a Gulf lender and insurers.
"We have a good mix geographically and in terms of risks," Alkari
said. The bank still buys overseas assets sometimes "but less than
"We receive $1 billion (a month) in this hand, but in the other hand
we pay $3.6 billion so how can we invest new money?" Alkari said.
(Reporting by Ulf Laessing; Editing by Catherine Evans)
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