Member of Parliament Abdel Salam Nasia said yesterday that the draft 2021 budget did not take into account the exchange rate approved by the Central Bank of Libya (CBL), economic inflation rates, or price levels in the local market compared to the low incomes of employees in general.

“The budget should not have exceeded 76 billion dinars at the most, whether for its length (four months at most until the planned 24 December 2021 elections) or to avoid an increase in the rates of economic contraction recorded by the local economy over the past ten years,” Nasia was quoted as saying by the official Libyan state news agency LANA yesterday.

He stressed that government spending is continuing by the Government of National Unity in accordance with the principle of one-twelfth, whether with regard to the first chapter on salaries, the second administrative chapter, or the third chapter on development related to the completion of projects as contained in the 2020 budget.

The principle of one-twelfth is where any sitting government can spend one-twelfth of revenues per month at the rate of the previous year’s budget – while it is waiting for a current or new budget to be approved.

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It is based on the principle that government must continue to govern while parliamentarians are in the process of agreeing to a new budget. The principle relies on the acquiescence of the CBL Governor. He needs to deposit money into the government’s account – prior to parliamentary approval. It works when there is a general political consensus between the CBL Governor and the government. It presupposes that parliament will approve the proposed budget.

Parliament has indeed given a green light to the current government to continue spending as a form of a caretaker government until the budget is approved.

Temporary Financial Arrangements

But it must also be recalled that the government could choose to use the clause in the Skhirat 2015 Libyan Political Agreement (LPA) which allows it to continue spending while political reconciliation is sought under the Temporary Financial Arrangement clause.

Source: Libyan Hearld