Home / Politics / The oil shutdown indicates a dark future for the Libyan economy, and bankruptcy of commercial banks in the East.

The oil shutdown indicates a dark future for the Libyan economy, and bankruptcy of commercial banks in the East.

It is no secret to anyone that the whole world is threatened by a sweeping economic crisis that coincided with the widespread spread of the Corona virus, which negatively affected international companies and stopped work in some major companies in China, which led to a decline in demand for oil and lower prices in the global market.

It is well known that any fluctuation in world oil prices quickly affects the Libyan economy in a negative way, which is an economy dependent on oil revenues, but this time it was not the decline in oil prices that destabilized the economy and threatened it with bankruptcy, but rather the continuous closure of oil fields and ports.

The alarm for the crisis

On January 17, loyalists of Hifter closed oil fields and ports on the apparent pretext for demanding a fair distribution of wealth but the truth is to blockade the Reconciliation Government economically, without realizing the scale of the disaster that will result in the whole economy as a result.

The closure of the country’s only revenue has caused material losses exceeding two billion dollars, and the production level has decreased to about 130 thousand barrels per day, a level that the country has not seen since 2011.

The specter of bankruptcy

The specter of bankruptcy began to circulate on the horizon of the banks of the eastern region, due to the intransigent of Hifter and his loyalists and their insistence on closing the oil.The parallel central bank stated that the parallel government has exhausted the ability to continue borrowing from the Central Bank of Libya, which spanned five years, which requires it to search for appropriate alternatives to finance the budget and not to involve the bank in meaningless issues in terms of budget financing.

The bank said, in a statement, that it had passed the salaries of the months of January and February in the Ministry of Finance account in parallel government,the bank will not stop covering salaries, but with controls that the Finance Ministry adheres to by submitting the required data to the committee to be formed by the bank in this regard.

Hindering the budget

This closure has the effect of hindering the approval of the budget for the current year, and has confused the presidential council which has not yet approved it, and it may be forced to follow the austerity policy because of the closure of oil and its low prices.

And oil prices in the global market fell by about 30%, to register Brent crude $ 33.04 a barrel, after reaching earlier at $ 31.02 a barrel, the lowest level since February 12, 2016.

These economic indicators show that the Libyan economy is very seriously threatened, especially since the reopening of oil at the present time will not address the problem once and for all after the losses caused by the closure on the country.

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