Al-Dibani: Central Bank independence is the new governor’s biggest test
LIBYA – Political analyst Abdullah Al-Dibani has said the choice of a new Governor of the Central Bank of Libya is tied to political balances and the struggle among rival contenders for power, arguing that the main test for the new management is protecting the bank’s independence and keeping monetary-policy decisions out of political wrangling.
The Central Bank at the heart of the struggle over resources
In exclusive remarks to Sputnik, Al-Dibani said the Central Bank had in recent years become one of the most important arenas of financial and political rivalry, as the body empowered to manage oil revenues and control foreign currency and international reserves.
He said repeated changes of governor are not always based on technical and banking expertise, but sometimes result from understandings, deals and power balances among the House of Representatives, the High Council of State and other centres of influence, amid domestic and international pressure.
Every change at the top of the bank reflects, in part and in his assessment, a redistribution of influence and of the gains linked to oil wealth, he added.
Field shutdowns, falling revenue and containing tension
He noted that when banking crises coincide with oilfield shutdowns or falling oil revenue, changing the governor becomes, in some cases, closer to an attempt to contain the economic fallout, absorb public anger and calm political conflicts than an institutional reform that tackles the root causes of the problems.
A temporary consensus and fears of fresh wrangling
Al-Dibani said agreement among the legislative and oversight bodies on naming a new governor could give the bank a period of calm and help reduce tension between the east and west of the country, but would not guarantee an end to political disputes, which could resurface over the bank’s management and the powers of its board of directors.
Each political party, according to its own calculations, is trying to keep its influence inside the new management or to steer monetary policy in its own interests, he said, leaving the governor with a difficult balancing act between those who backed his appointment and maintaining the minimum stability the economy needs.
How power-sharing affects budget unification
He argued that appointing the governor on the basis of power-sharing understandings affects efforts to unify economic and financial institutions, and could obstruct the unification of the general budget and stronger oversight of government spending if disputes flare again between the government, parliament and oversight bodies.
Independent monetary decisions and institutional safeguards
Al-Dibani stressed that the real test for the new governor is preserving the independence of the bank and its decisions, and building balanced relations with the various parties that prevent monetary-policy tools from being used for political ends.
He warned that genuine independence would be hard to achieve in a fragile political environment and, in his view, without a constitutional and legal umbrella protecting the bank’s leaders from pressure and removal. Stable monetary policy, he argued, requires a lasting political settlement that separates economic management from struggles over power.
