Libyan economist warns of inflation linked to deficit financing
By the AFREEQUE newsroom, based on Libya Herald
Libyan economist Mohamed Al-Safi has warned that continued financing of the budget deficit through public debt and money creation undermines the dinar’s purchasing power and citizens’ savings. The practice has been used in the east and west of the country since 2014, without sufficient budgetary reforms, according to the Libyan Business Council.
Libyan economist Mohamed Al-Safi has warned against financing the budget deficit through public debt, saying the practice fuels inflation. He was speaking on a Libyan satellite television channel, according to Libya Herald, which reported comments relayed by the eastern branch of the Libyan Business Council.
According to Al-Safi, increasing the money supply without addressing the causes of the deficit reduces the dinar’s purchasing power, boosts demand for dollars and makes goods more expensive. He believes this depreciation acts as an indirect tax, as households lose some of the value of their money even without spending it.
The warning comes as the Libyan Parliament has set priorities regarding wages and imports, in an announcement published on 19 October.
Summary produced with the help of artificial intelligence tools, under AFREEQUE’s editorial responsibility.
