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Libya could exhaust wheat reserves in 2-3 months

By on February 10, 2015

Libya will exhaust its wheat reserves in two or three months unless a state fund tasked with ensuring supplies receives money held up as a result of the political turmoil gripping the country and a slump in oil revenues, a top official said.

The North African country is in chaos, with two governments and parliaments allied to armed factions vying for power four years after the overthrow of Muammar Gaddafi.

Neither side — the recognized government holed up in the east since losing the capital in summer or a rival outfit now running Tripoli — has prepared a budget for this year. Both are busy fighting for territory, oil facilities, and control of the central bank and the country’s vital oil revenues.

Wheat imports have been disrupted by fighting between the rival factions. Air strikes on the western port of Misrata have made shippers reluctant to deal with Libya, while local banks suffer from a dollar shortage due to a slump in oil revenues.

As a result, Libya has been forced to halve flour supplies to bakeries to 65,000 tonnes a month. Despite this, the country’s wheat reserves will run out within a maximum of three months without fresh supplies.

Jamal El-Shibani, head of the state Price Stabilisation Fund (PSF), which provides finance for mills importing wheat, played down talk of a crisis, but told Reuters there was a shortage of flour. “We have flour security for one month and we have wheat reserves which I expect to last until the start of April.”

In an indication of the difficulties of bringing in imports, a state agency has been trying for three weeks to buy 50,000 tonnes of milling wheat and 25,000 tonnes of rice but payment issues have prevented a deal, European traders have said.

A budget crisis has undermined the funding of imports. The power struggle has knocked out almost all oilfields. Oil exports, Libya’s lifeline, have fallen to around 200,000 barrels a day — a fifth of the levels seen in 2013.

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