Libya's wheat imports are under threat due to current and anticipated problems with the letters of credit (L/Cs) on which the continuity of the country's bread supplies depend.

While Libya's 35 private milling firms use L/Cs to import wheat, the state provides L/Cs to the importers to guarantee payment in what is still a heavily susbidised market.

US$100 million debt

But payment problems, a chaotic marketplace and corruption are hampering Libyan importers from making big wheat deals with foreign suppliers.

Libya's largest wheat importer, Mahatan Tripoli, now says it may have to postpone its next planned major wheat purchase unless the state starts paying off nearly US$100 million it already owes the now privately owned firm.

No L/C terms

According to the miller, if it does not receive payments from the state within two weeks, it will have insufficient funds to buy on L/C terms.

Meanwhile, the state is having problems meeting its L/C obligations to Libya's wheat importers because the country is facing a foreign exchange crisis.

Export disruption

This is because rogue militia outfits have disrupted Libya's oil exports, thus starving the country of hard currency and thereby jeopardising the subsidised bread market which enables Libyans to pay as little as two US cents per loaf.

According to Mahatan Tripoli, it is now also taking longer to open L/Cs, which are also becoming more expensive.

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