"This rate will enter into force on Jan. 3, 2021, and will be available for all government, commercial and personal uses," the CLB said.
Kamal al-Mansouri, a Libyan economic researcher, believes the bank's decision is a "necessary evil" to face the current economic crisis.
"The value of the public debt has reached 150 billion dinars, which is huge as a result of an unbalanced fiscal and monetary policy over the past few years. Therefore, it was necessary to intervene and unify the exchange rate of the dinar against the U.S. dollar," al-Mansouri told Xinhua.
For years, some companies and individuals had access to U.S. dollars at the official rate of 1.4 dinars, while the rate in the black market was more than six dinars per U.S. dollar, which is an unnatural gap that has to be addressed.
"Everyone will have access to U.S. dollars at the same rate. Therefore, the gab in the black market will shrink and will not exceed 1.5 dinars with the new official rate. The devastating economic effects will decrease due to the black market's control of the supply and demand," al-Mansouri added.
Previously, the United Nations, the U.S., EU, and Egypt convened a meeting of representatives of Libyan economic institutions in Geneva to develop critical economic reforms. They agreed that the current economic situation is unsustainable and that Libyan institutions must take steps towards functional unification.
Due to the "second civil war" that started in 2014, Libya is a politically divided country that has two governments and two central banks. This has deteriorated the local economy, generating an informal exchange market, and a severe lack of liquidity.
The Central Bank of Libya is based in Tripoli and controlled by the Government of National Accord (GNA), an interim regime that is backed by the United Nations. The Benghazi-based government is under the control of the Libyan National Army (LNA), which is led by Commander Khalifa Haftar.