Saddek Omar Elkaber has emerged as a rare dissenting voice against fiscal slippage in Libya, refusing further giveaways to the government and standing up to the political pressure that resulted from his actions. Calling the government revenue projections that underpin its $53bn budget for 2014 “grossly exaggerated”, Elkaber has been pilloried by the country’s prime minister, Abdullah al-Thinni, who raged that the governor was “acting like the ruler of Libya” in a television interview in April.
Elkaber’s intervention may have angered the government — whose survival depends on its ability to appease the many factions that hold sway in post-Gaddafi Libya — but it is crucial for the country’s long-term economic sustainability.
Emerging Markets reaches Elkaber in Malta, and the thought occurs that perhaps the whole central bank has moved here. It wouldn’t be the first time a MENA central bank had moved offshore to operate away from civil war or occupation. But Elkaber says he plans to be back in Tripoli the next day, fulfilling the bank’s duties with as much professionalism and transparency as it can muster.
“It is even more important to preserve the integrity of this institution during this unstable and critical phase of the country’s development,” says Elkaber, who took the job on in September 2011. “Yes, it’s very challenging. But we’ve been able to manage open discussions with all parties, to try to convince them of the central bank being alone, and not to be pressured.”
TWO GOVERNMENTS, ONE BANK
At times the central bank appears the most stable single voice in Libya, since it continues to operate, no matter how profound the vacuum is in the country’s political leadership. “We are facing a huge problem,” Elkaber admits. “We have two governments: one in the east, one in the west. But the central bank still functions from its headquarters in Tripoli.” Unlike several arms of the government itself, which at one stage was so beset by militias that it took refuge in a Greek car ferry moored in Tobruk.
“The challenges facing the Central Bank of Libya are huge,” says Elkaber. “There is safety and security, human development, the autonomy and integrity of the institution, capacity-building, fighting corruption, maintaining stability in the banking sector, establishing the right environment for the private sector to be established and to grow locally, and paving the way for international investors to come — which,” he adds, “as you know, is not the right time right now.”
But can anything be achieved in such an environment? He says that “except for the last two months,” the answer is yes. Libya is working with the IMF and World Bank on capacity-building, and is trying to modernise the banking sector and improve the infrastructure that supports it. “But in this interruption for the last few months, we almost stopped everything.”
Building capacity is a particular challenge. The Libyan diaspora is talented and impressive, from the UK to the US and Canada, “but because of the problems with security and safety, we will not be able to attract the right people to come and help us.”
Nevertheless, asked whether he is optimistic about Libya, he says he is, provided “we can gather all the parts together and try to come with one government and build the way for the new parliament to move forward in a responsible way.”
Instrumental in Libya’s future will be oil, which was blighted by a drop in exports from 1.2m barrels a day, generating $4.5bn of revenue a month, to a low of 200,000 a day, he says. Because of a fast-track recovery programme, production had topped 1m barrels per day by the end of September, and revenues were $2bn for the month. “Hopefully the exports are increasing, which is a good sign for us,” he says. “We have been hurt badly by [the reduction in exports]: our reserves dropped from $135bn to below $100bn as of August.” Now, he says, “it is building up again.”
SAFETY FIRST
Everything, though, comes back to security. “Safety and security is the most important thing for everyone in Libya. We need to promote the rule of law as a fundamental value of the new Libya.” Beyond that, his priorities include corruption — “due to the roots of this behaviour that have taken place in the last few years” — public financial management reform, subsidy reform, diversification of the economy and sound monetary policy, “to maintain price stability and reduce unemployment, which stands at 30%”.
And is the central bank, in the absence of clear government, going to have to lead this work? “I think the role of the central bank since 2011 has really become leading,” he says. “Leading change, finding corruption, taking different initiatives to modernize the way the government runs, and the supervision of public funds. We will continue doing this.”