Libya's main financial institution halts operations.
In Libya, the central banking operations have temporarily halted after the kidnapping of an employee. The IT manager was allegedly nabbed by unidentified groups, resulting in a halt of all banking operations and facilities. Additional employees have also been subjected to threats. All banking services and sectors, such as the exchange rate deposit for the national oil business, will continue to be suspended until the IT worker's safe return.
This ongoing crisis in Libya, which features two competing governments, is escalating further. This North African nation has been battling for influence and resources between two dominant groups led by Prime Minister Abdel Hamid Dbaiba in the west and Field Marshal Khalifa Haftar and his sons in the east. The country is quite divided, with two parallel governments and administrations functioning side by side.
The Central Bank acts as a depository for the oil and gas trade revenue, which accounts for around 95% of the nation's income. Its duties include disbursing public salaries, even in the eastern regions. Wolfram Lacher, an expert from the German Institute for International and Security Affairs (SWP), labels the Central Bank as the "treasure trove" in the conflict-ridden Libya, given its immense foreign exchange reserves and vital role in the nation's oil-driven economy.
The strife in Libya is also fueled by foreign interests seeking influence in this oil-rich state. Haftar's side primarily enjoys Russian support, while the Dbaiba government gains backing from Turkey. Turkey successfully thwarted Haftar's self-declared Libyan National Army (LNA)'s attack on Tripoli in 2020. Since then, the country has remained divided, with no significant battles since the summer of 2020. However, recent indications of rearmament arise, and there are concerns that a new phase of major conflicts could soon ensue.
The crisis at the Central Bank, with its employee in captivity, has further complicated the ongoing financial instability in Libya. This escalating situation in Libya, with its divided governments and foreign backing, poses a significant threat to the stability of the nation's oil-driven economy, including its vital banking operations.
