Former Central Bank of Libya board member Muraja Ghaith warned of the repercussions of any salary increases approved without a comprehensive financial and economic study, stressing that such decisions could lead to new pressures on public finances, and may push for a new devaluation of the Libyan dinar and a significant rise in commodity prices.
Ghaith said in statements that increasing salaries without careful consideration, or limiting them to specific entities while excluding others, and without considering the state’s financial capacity, represents an unsound measure that would affect the sustainability of public finances.
He explained that the public treasury may face difficulty bearing the burden of these increases, pointing out that the likely result would be resorting to raising the exchange rate again, which would impact the value of the Libyan dinar and the level of prices in the markets.
He added that any new decline in the value of the dinar would lead to an increase in the costs of goods and services, which could erode the salary increase itself and lead to a vicious economic cycle, where the citizen loses a large part of the benefit of the increase due to the wave of high prices.
Ghaith pointed out that addressing the crisis does not lie only in raising salaries, but in confronting the real causes of high prices, explaining that the imbalance lies in pricing many goods according to the dollar exchange rate in the parallel market, even though a large percentage of them are imported through official credits.
He stressed that if the state is serious about addressing the price crisis, it must intervene to reduce these imbalances and regulate import operations so that they are limited to bank credits, in addition to activating the role of oversight bodies and monitoring prices in the markets.
The former Central Bank of Libya board member emphasized that confronting inflation and high prices is not achieved through salary increases alone, but rather through improving economic management, strengthening governance, and raising societal awareness, including boycotting goods whose prices rise excessively.
Ghaith noted that the strength of the Libyan dinar is linked to several factors, including fighting the black market and reducing smuggling operations, especially fuel smuggling, explaining that lifting fuel subsidies requires a clear political decision and strong will, not hesitant stances.