Libya devalues currency for first time in four years

CAIRO (Reuters) - Libya's central bank announced a 13.3% devaluation of the country's dinar currency on Sunday, setting the exchange rate at 5.5677 to the U.S. dollar effective immediately.

This is the first official devaluation since the bank agreed to a devalued exchange rate of 4.48 dinars to the dollar in 2020.

The parallel market exchange rate is currently at 7.20 dinars to the dollar.

In September last year, the dinar slid against the U.S. dollar in the black market due to a crisis over control of the central bank that slashed oil output and exports.

The crisis was resolved later in September following an agreement signed by representatives of Libya's rival eastern and western legislative bodies. The agreement, facilitated by the United Nations, paved the way for the appointment of a new central bank governor.

In November, the eastern-based parliament speaker reduced the tax on foreign currency purchases to 15% from 20%. The tax is added to the rate when people buy foreign currencies from commercial banks.

Libya has been plagued by instability since a NATO-backed uprising in 2011, leading to a split in 2014 between eastern and western factions, each governed by rival administrations.

The spending of the two governments in 2024 totalled 224 billion dinars ($46 billion), including 42 billion dinars for crude-for-fuel swaps, the central bank said in a statement on Sunday.

Public debt stood at 270 billion dinars, it said, projecting that it could exceed 330 billion dinars by the end of 2025 due to the lack of a unified budget.

In December, Stephanie Koury, deputy head of the U.N. mission to Libya, urged the country's decision-makers to "urgently agree on a framework for spending in 2025 with agreed limits and oversight".

($1 = 4.8250 Libyan dinars)

(Reporting by Jaidaa Taha, Ahmed Tolba and Ahmed Elumami; Editing by Elaine Hardcastle and Emelia Sithole-Matarise)