Libya to admit more foreign banks
Published: Feb 18, 2010 21:05 Updated: Feb 18, 2010 23:40
TRIPOLI: The Libyan Central Bank will allow more foreign banks to operate in Libya amid efforts to revitalize the economy and bring foreign capital into the country.
A statement by the Libyan Central Bank called on foreign banks "to submit an expression of their interest to set up a subsidiary in the Socialist People's Libyan Arab Jamahiriya."
Foreign banks are to be allowed to own 49 percent of joint bank ventures with full management control, while domestic partners will own the remaining 51 percent.
"The move is part of ongoing efforts to reform the financial sector and has been expected for some time," Rory Fyfe, a Libya expert with The Economist Intelligence Unit, told The Media Line. "It is an extremely positive step for the development of the Libyan economy and should help boost bank lending, which has already been expanding rapidly in recent years.
"This will provide vital assistance for growth in the nascent private sector," he added.
For the last couple of years Libya has been reducing the formerly dominant role of state owned actors in its economy. In 2009 two state-owned banks were partly sold, with another sale expected in 2010, and two of Libya's major telecommunications companies, Al-Madar and Libyana were partially privatized.
Philippe Dauba-Pantanacce, senior economist, Middle East and North Africa with Standard Chartered Bank said increasing privatization of the telecom sector has also included contracts on infrastructure.
"A French company won a major deal in November to put in place telecom infrastructure," he told The Media Line. "This was recently complemented by a contract awarded to a major Swedish telecom company."
There have been reports that parts of the Libyan Iron and Steel Company and National Commercial Bank might also be up for partial sale.
According to a report by the Economist Intelligence Unit Bank, lending to the private sector increased by 54 percent between the end of 2007 and October 2009, and has been predicted to continue expanding at a similar rate.
Analysts have suggested the policies are related to the gradual thawing of Libya's international relations over the last seven years, contrary to the isolation that typified the first 30 years Muammar Qaddafi is in power.
Until 2007 Libya was on the United States' list of state sponsors of terrorism both for allowing European terrorist organizations to set up training camps in the country and for its involvement in the 1988 Lockerbie bombing in which 270 people were killed as Pam Am flight 103 from New York to London was blown up over the Scottish village of Lockerbie.
However, in 2003 Qaddafi announced that Libya was giving up its program to develop weapons of mass destruction and pay compensation to families of victims of the Lockerbie bombing.
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