Libya's Serraj blames central bank amid oil blockade

Libya's internationally recognised prime minister Fayez al-Serraj on Wednesday said Central Bank of Libya governor Sadiq al-Kabir was to blame for the recent non-payment of salaries to state workers and the non-issuance of letters of credit. Friction between Serraj and Kabir threatens to undermine the Tripoli government as it fends off a military assault, deals with a blockade of its main oil exports, and prepares to handle a coronavirus outbreak.

Serraj said on al-Rasmiya television channel that he had "tried to avoid a war of words with the Central Bank of Libya, but things have really crossed all lines". He said the bank had to hold a board meeting, something that would bring together directors from across the divide of Libya's conflict, in order to discuss changes he said Kabir seeks in the exchange rate.

Analysts say a meeting of the board, which has more members aligned with the east than with Tripoli, could provide eastern authorities with a chance to try to achieve their long-standing goal of having Kabir replaced. Since 2014, Libya has been split between competing governments and military alliances based in Tripoli and the east, a division that has been reflected in the central bank and the National Oil Corporation.

Serraj is head of the Tripoli-based Government of National Accord (GNA), which is recognised by the United Nations and controls the capital and some other parts of the northwest. For the past year, the eastern-based Libyan National Army (LNA) of Khalifa Haftar has been trying to capture Tripoli. Eastern forces have this year imposed an oil blockade, cutting off Libya's main source of revenue.

The Tripoli-based NOC is the only legitimate exporter of Libyan oil and payments are made through the Tripoli-based central bank. Despite the territorial split, the bank still funds the salaries of most state employees across Libya. However, many state employees have not been paid this year.

"There is the problem of salaries. Two, three months without justification. The Central Bank did not accept salaries," Serraj said. Letters of credit needed for imports have also not been issued. Serraj accused the central bank of closing the credit system and not informing his government.

The bank said in a statement last week that it had promptly executed salaries for January-March of this year and that the main cause of the financial and economic crisis was the GNA's failure to resolve the oil blockade. (Reporting By Angus McDowall in Tunis, additional reporting by Aidan Lewis in Cairo; editing by Grant McCool)

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