Libya’s Central Bank, the country’s eastern parliament on Monday appointed Naji Mohamed Issa Belqasem as the new governor. This decision follows last month’s contentious removal of the long-standing governor, Sadiq al-Kabir, by the Tripoli-based Presidential Council. Belqasem, previously serving as the Central Bank’s Director of Banking and Monetary Control, takes over the role at a time of ongoing political instability and economic challenges in the North African country.
Parliament spokesperson Abdullah Bliheg confirmed that all 108 lawmakers present voted unanimously to approve Belqasem’s appointment, signaling a rare moment of unity in the deeply divided Libyan political landscape. In addition to Belqasem, the parliament also appointed Mari Muftah Rahil Barrasi as his deputy, with both officials expected to form a new board of directors for the Central Bank within the next 10 days.
The decision was part of a broader agreement facilitated by the United Nations, aimed at resolving disputes between Libya’s rival political bodies and stabilizing the country’s financial institutions. The move is seen as a critical step in addressing the nation’s economic dysfunction, particularly regarding the allocation of its vast oil wealth, which has been a source of tension for years.
The appointment of Belqasem as governor reflects the complex and fractured political situation in Libya, which has been divided since the fall of longtime leader Moammar al-Gadhafi in 2011. The country remains split between rival governments: the Government of National Unity (GNU), based in the capital Tripoli and led by Prime Minister Abdul Hamid Dbeibah, and an eastern-based administration supported by the Libyan National Army (LNA) and led by Parliament Speaker Aguila Saleh.
Last month, the Tripoli-based Presidential Council, which is allied with the GNU, issued a decree dismissing Sadiq al-Kabir from his position as Central Bank governor and appointing Mohamed Abdul Salam al-Shukri, the former deputy governor, as his replacement. Al-Kabir had served as governor since October 2011, shortly after the fall of Gadhafi.
However, this move sparked a fierce backlash from Libya’s eastern parliament and the High Council of State, a consultative body based in Tripoli. Both bodies criticized the Presidential Council’s decision, stating that it was not made in accordance with interim regulations that require the coordination of Libya’s key political institutions. Under these regulations, decisions affecting the country’s central bank should be jointly agreed upon by the parliament and the High Council of State, as part of the UN-backed talks aimed at overseeing the unity of the country’s institutions.
Sadiq al-Kabir’s tenure as Central Bank governor spanned more than a decade, during which time Libya’s economic fortunes have fluctuated dramatically. While Libya possesses Africa’s largest proven oil reserves, its political instability has severely hampered its ability to fully exploit this wealth. During al-Kabir’s tenure, the country’s economy faced multiple crises, including disruptions to oil production, inflation, and a liquidity shortage that has plagued Libyan banks for years.
In recent months, al-Kabir faced mounting criticism from both the eastern and western political factions over his handling of Libya’s oil revenues. Much of the tension stemmed from disagreements over the equitable distribution of oil wealth, with many in the east accusing al-Kabir of favoring the Tripoli-based government in his allocation of funds. Oil, which accounts for nearly all of Libya’s export revenues and government income, has long been a flashpoint in the country’s conflict.
The struggle over control of Libya’s financial institutions reflects deeper divisions within the country, as rival factions vie for power and resources. While the Central Bank is nominally an independent institution, it has become deeply entangled in Libya’s broader political and military conflict.
The United Nations has played a central role in facilitating Libya’s political transition since the overthrow of Gadhafi. In 2020, a ceasefire brokered by the UN paved the way for the formation of the Government of National Unity (GNU), which was meant to unify the country’s fractured institutions and lead Libya toward national elections.
However, delays in the election process and ongoing disputes between Libya’s eastern and western factions have hindered progress. The appointment of Naji Belqasem as Central Bank governor is part of a broader effort by the UN to stabilize the country’s institutions and foster economic recovery.
Stephanie Williams, the former acting head of the UN Support Mission in Libya (UNSMIL), has emphasized the importance of economic reform in the country’s peace process. “Libya’s financial institutions, especially the Central Bank, are key to the country’s future stability and development,” she said during previous negotiations between the rival factions. “Reforming these institutions is essential to addressing the grievances that have fueled conflict.”
The UN-brokered agreement to appoint new leadership for the Central Bank is seen as a step toward creating a more unified and transparent financial system. But many challenges remain, including ongoing disputes over the country’s vast oil wealth, which has been a major driver of conflict.
As the new governor of Libya’s Central Bank, Naji Mohamed Issa Belqasem faces a daunting set of challenges. Chief among these is the need to restore confidence in Libya’s banking system, which has been severely weakened by years of instability. The country’s banks have struggled with liquidity shortages, inflation, and a lack of public trust.
One of Belqasem’s first tasks will be to address the issue of oil revenue distribution, a source of ongoing friction between Libya’s rival governments. The Central Bank plays a critical role in managing Libya’s oil revenues, which are deposited into its accounts and then distributed to the government to fund public services and development projects. However, this process has been highly politicized, with both eastern and western factions accusing each other of siphoning off funds for their own political and military purposes.
Belqasem and his deputy, Mari Muftah Rahil Barrasi, will also be tasked with forming a new board of directors for the Central Bank. This is seen as an opportunity to bring in fresh leadership and expertise, and to build a more transparent and accountable institution.
In addition to the internal challenges facing the Central Bank, Belqasem will need to navigate Libya’s complex international relationships. The country’s oil wealth has long attracted foreign interest, with several countries, including Italy, France, Russia, and Turkey, vying for influence in Libya’s political and economic affairs. The new leadership will need to balance these competing interests while maintaining Libya’s sovereignty and independence.
Libya’s economy is heavily dependent on its oil sector, which accounts for nearly 60% of its GDP and over 95% of government revenues. However, the country’s oil production has been repeatedly disrupted by conflict, infrastructure damage, and political disputes. In 2020, Libya’s oil output plummeted to just 100,000 barrels per day (bpd) during a blockade imposed by forces loyal to the eastern-based Libyan National Army. By contrast, prior to the 2011 uprising, Libya was producing around 1.6 million bpd.
Since the 2020 ceasefire, oil production has gradually recovered, reaching around 1.2 million bpd in 2023. However, the country’s economy remains fragile, with high inflation, widespread unemployment, and a growing public debt burden. The International Monetary Fund (IMF) has repeatedly warned that Libya needs to implement structural reforms to diversify its economy and reduce its dependence on oil.
In addition to these long-term challenges, Libya is also facing the immediate effects of global economic instability. The COVID-19 pandemic and the war in Ukraine have disrupted global supply chains, driving up the cost of imports and contributing to inflation in Libya. The country imports most of its food and other essential goods, making it highly vulnerable to fluctuations in global commodity prices.
Despite the many challenges, some analysts remain cautiously optimistic about Libya’s future. The appointment of new leadership at the Central Bank, coupled with ongoing UN efforts to broker a political settlement, could pave the way for greater stability and economic recovery.
“The new appointments at the Central Bank could mark a turning point for Libya,” said Ahmed Ali, an economist specializing in North African economies. “If the new leadership can restore confidence in the banking system and ensure a fair distribution of oil revenues, it could help to stabilize the economy and reduce tensions between the rival governments.”
However, much will depend on the ability of Libya’s political leaders to put aside their differences and work toward a common goal. While the UN-brokered agreement to appoint new leadership at the Central Bank is a positive step, it is just one piece of the puzzle in Libya’s broader political and economic transition. Naji Mohamed Issa Belqasem and his team face the unenviable task of steering Libya’s Central Bank through one of the most challenging periods in the country’s recent history. The stakes are high, not just for the bank, but for the future of Libya itself.
