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Libyan Dinar Slips on Black Market amid Central Bank Crisis

People cross a street at Martyrs Square in Tripoli, Libya, July 5, 2021. (Reuters)
People cross a street at Martyrs Square in Tripoli, Libya, July 5, 2021. (Reuters)
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Libyan Dinar Slips on Black Market amid Central Bank Crisis

People cross a street at Martyrs Square in Tripoli, Libya, July 5, 2021. (Reuters)
People cross a street at Martyrs Square in Tripoli, Libya, July 5, 2021. (Reuters)

Libya's dinar currency is losing value against the US dollar in the country's black market amid a crisis over control of the central bank that has slashed oil output and exports.

Two black market dealers in Tripoli gave prices of 7.95 dinars to the dollar on Monday compared to 7.36 a week earlier, a drop of about 8%. The official exchange rate is 4.7 dinars to the greenback.

The sliding dinar may indicate that the impact of the ongoing dispute over leadership of the Central Bank of Libya (CBL) is starting to hit the economy more widely, which may further destabilise the major oil producer, according to Reuters.

The dealers attributed the dinar's decline to a lack of dollars in the market as the crisis has stopped the CBL issuing letters of credit, a key tool of monetary policy and exchange and export transactions in Libya for years.

Its economy also relies heavily on oil revenue, and factions in eastern Libya have blockaded most exports as a tactic in the dispute over the CBL, leading to force majeure being declared on oil fields and cutting off the state's source of income.

The Government of National Unity, based in Tripoli in western Libya, has said it expects the CBL to resume issuing letters of credit this week.

The crisis began when Presidential Council chief Mohammed al-Menfi, based in Tripoli, last month announced he was replacing veteran central bank Governor Sadiq al-Kabir, prompting pushback from eastern factions.

Legislative bodies aligned with the two sides are conducting UN-backed consultations aimed at resolving the crisis but have not yet announced significant progress. While the crisis continues, the CBL's access to international dollar markets appears limited.

"The exchange price is volatile because no dollars are entering the country, and oil (exports), the only source of revenue in the country, have also stopped," said a black-market dealer. The dinar could drop further if the crisis drags on, he added.

“There should be a solution very quickly because we, the citizens, are the only victim of the central bank crisis,” said Hisham Mohamed, a 45-year-old father of five in Tripoli.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.