Libya's fragile internationally recognised government in Tripoli has given the country's central bank until the end of February to clear the backlog in letters of credit (L/Cs) to importers approved by the economy ministry in 2017.

The deadline coincides with a significant upturn in the Libyan economy due to much stronger oil prices.

L/Cs cleared

According to official figures, the ministry authorised 5,557 requests for L/Cs worth US$4.1 billion between August and December 2017.

Analysts reckon that only 2,000 or so of these L/Cs worth around US$1.5 billion have been processed so far.

Promising L/C opening

Talk that an L/C was opened for an underwear shipment may have helped buoy the Libyan dinar recently.

The central bank has so far been prioritising essentials such food and medicine.

Libyan foresight

With oil prices recovering to three-year highs of around US$70 a barrel, Libya's decision not to devalue its currency when oil prices were low as countries such as Russia and Nigeria did may now be working to the country's advantage.

Oil revenue nearly tripled to US$14 billion in 2017 from US$4.8 billion in 2016, according to central bank data. Meanwhile, oil giants Shell and BP recently reached agreements to buy Libyan crude for the first time in years.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.