Libya lifts withdrawal limits as cash crisis eases

Move signals renewed confidence in banks as liquidity crisis prompted by the civil war appears to ease

Libya scrapped a limit on cash withdrawals on Thursday in a move to rebuild confidence in its banks as a liquidity crisis stemming from last year's war eases.
"We have lifted the ceilings ... There are no limits any more," central bank governor Saddek Omar Elkaber told reporters. "There are no problems with liquidity, it is going the right way."
The North African country faced an acute cash crisis when people desperate for money rushed to banks during the eight-month uprising that ended Muammar Gaddafi's 42-year rule.
Large queues would form outside banks as workers had to make do without their regular salaries. These have since disappeared as salaries have been paid.
Before the announcement, the limit was 2,000 Libyan dinars per month, a central bank official said, having been raised from earlier ceilings.
"The central bank of Libya calls on all citizens, businessmen, companies ... in all sectors to not hesitate in putting their money in banks," Elkaber said reading a statement.
The central bank has been seeking to restore liquidity in the Libyan banking system, which officials have said was depleted of its dinar reserves when Gaddafi's entourage seized 3-4 billion dinars from the central bank. The problem was made worse when people rushed to the banks during the war to withdraw cash.
Libya has been working to amend its banking laws, attract foreign investment and stimulate its private sector following the war.
Elkaber said various committees had been set up to look into issues such as interest rates as well as introducing Islamic banking in the oil-producing nation.
"A committee is studying the issue of interest rates and will make recommendations to the government," he said. "We also have a committee looking at how to introduce Islamic banking."
The ruling National Transitional Council (NTC) last month approved an Islamic banking law that will introduce sharia-compliant banking.
NTC Chairman Mustafa Abdel Jalil said in October Libya's new rulers were working on an Islamic banking system. The central bank submitted a proposal on this to the council for approval in the last few months.
With the civil war over, foreign executives are weighing the opportunities against the risks in an oil and gas-producing nation with the resources to pay for urgent reconstruction and healthcare needs.
As the country tries to get back to business and prepare for national assembly elections less than two weeks away, the government is struggling to impose its authority on a myriad of armed groups who have yet to lay down their weapons.