Former Libyan leader Muammar Gaddafi sold around 20 percent of Libya’s gold reserves, worth more than $1 billion in the final days of his regime, the country’s Central Bank Governor said last week.
Qassem Azzoz said 29 tonnes of gold — worth 1.7 billion dinars — were sold to local merchants beginning in April as the sanctions-hit regime sought to gather much-needed cash.The price represents a significant discount on current international spot prices.
“The gold was liquidated in order to pay salaries and to have liquidity in Tripoli in particular,” Azzoz said.
According to Central Bank officials, some of the gold likely made its way out of the country to neighbouring Tunisia and beyond, circumventing international sanctions.
As Libya’s financial system creaks back to life after months of sanctions and war-caused closures, the hunt is now on for billions of dollars in assets that are thought to have been squirrelled-away by Gaddafi and his regime.
While Azzoz said the official balance sheet of the central bank was largely in tact with $115 billion in holdings — $90 billion of which are held abroad, he said billions were likely hidden off the books.
“No assets of the Central Bank of Libya have been stolen, gold or otherwise, the only part liquidated was part of the gold reserves.”
“The Gaddafi regime was known to have hidden sizeable amounts of funds outside the banking system, unaccounted for in the first place, there may have been movement of such assets.”
The bank chief said he would now track down Libya’s assets “country by country, bank by bank and account by account,” a tongue-in-cheek reference to Gadhafi’s threat to look for opponents street by street, alleyway by alleyway, house by house.
Officials said there was no firm estimate for how much Gaddhafi had hidden, but it would form part of an external audit.
“It was off the books, we don’t know what we don’t know,” said Wafik Shater, part of a prime ministerial task force charged with getting ministries and the central bank back up and running.
“We will have to calculate oil revenues during his regime and figure out how much is missing.”
In the meantime, Libya’s new rulers are confident they have enough cash to make do.
The existing reserves are equal to around 200 percent of Gross Domestic Product (GDP).
That is enough to cover the economy from stalling completely for two years — roughly the time estimated for oil revenues to return to pre-war levels.
While trying to whip the country into fiscal health, the central bank said it was also working to ease the hangover ordinary Libyans are feeling from the war.
Although people are struggling with a lack of hard currency and sky-high prices for some goods, Azzoz insisted that the matters were under control.
Around 65 percent of the nearly two billion dinars worth of hard currency that was stuck in Britain is now circulating in the banking system and the rest is on its way.
To ensure that the influx of cash does not send prices soaring Azzoz said a cap on bank withdrawals would stay in place, but may be lifted from 250 dinars to 500 dinars last week.
Source: Vanguard
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