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Cash-strapped Gadhafi sold gold to pay salaries

Cash-strapped Gadhafi sold gold to pay salaries

Ousted Libyan leader Moammar Gadhafi's regime sold about 20 percent of the country's gold reserves to cover salaries, as he struggled to hold onto power during the final months of the civil war, the new governor of Libya's central bank said Thursday.
Qassim Azzuz also said that none of the bank's roughly $115 billion in assets "went missing or were stolen" during the six months of fighting. That figure, however, did not include money the Gadhafi family is believed to have in hiding outside the banking sector, he said.
The sale in April of 29 tons of the roughly 145 tons of gold Libya is believed to have in reserve reflects the challenges Gadhafi confronted as he struggled to crush what began as a mass uprising in the east and quickly mushroomed into a full-blown civil war. Brutal assaults on the country's civilian population by forces loyal to the Libyan strongman resulted in sweeping international sanctions and NATO air strikes.
The sanctions froze Libya's massive foreign assets, which stand at about 110 percent of GDP, according to several analysts, and had many speculating that Gadhafi was either raiding the central bank's coffers or selling gold to pay troops that included foreign mercenaries.
Azzuz told reporters that the gold was sold to local traders, netting 1.7 billion dinars ($1.4 billion) that was used to pay salaries, particularly in the Tripoli area. The Libyan capital was one of the last places in which Gadhafi retained a firm grasp on power.
Asked if the gold sale violated sanctions, Azzuz said that the issue was not "of relevance because it was local liquidation of gold in Libya in exchange for dinars."
But he acknowledged that gold sold to the local traders likely made it across the country's western border to Tunisia.
Azzuz said the central bank was under considerable pressure from the Gadhafi regime in recent months, but insisted that those running the bank had done so "under great risk" and had managed to "maintain the assets."
He said an external audit would be conducted in the future.
Azzuz said the $90 billion in central bank assets held abroad were accounted for, as were about $25 billion held locally.
Not all branches of Libyan banks have reopened, in part because not all staff have returned to their jobs, Azzuz said.
The central bank head said that the current ceiling on withdrawal _ set at 500 dinars per day _ would be gradually increased. The limit was imposed early in the uprising to ensure adequate liquidity in the face of the sanctions, but Azzuz said it was also a way of limiting inflationary pressures. The civil war led to massive price surges in key goods and items, such as foodstuffs and fuel.
"The banking sector has done quite well, and is stable and sound," said Azzuz.
Azzuz also said a competition was being held to pick new designs for the Libyan currency. Gadhafi's picture is currently on several bills, including 1 dinar, 20 dinar and 50 dinar notes.


Updated : 2021-06-18 20:30 GMT+08:00