Reuters says that unofficial Libyan banknotes have been exchanged for real dollars and contributed to the dinar’s devaluing, according to three sources familiar with the matter.
The sources told Reuters that some banknotes were printed by Russia and exported to eastern Libya this year while others were printed illicitly within Libya.
The new banknotes have been described as counterfeit by the Central Bank of Libya (CBL) in Tripoli but are being changed into hard currency on the black market or through local banks, according to a source in Libya’s eastern government, a Libyan banking source, and a diplomatic source.
According to the banking and eastern government sources, the counterfeit money has been used to fund infrastructure projects in the east following last year’s devastating floods.
The money may also be used to finance Russian mercenary activity in Libya and the Sahel, the diplomatic source said.
Russia and Haftar
Russia’s role in the infusion of new banknotes into Libya was flagged to Reuters by The Sentry, an international investigative and policy group focused on corruption and war crimes.
The U.S. State Department in June sanctioned Goznak for printing more than $1 billion in counterfeit Libyan currency, without saying where or when the notes were printed or delivered.
Russia had supplied eastern authorities with several billion dinars from 2016 until a 2020 ceasefire, helping allied eastern commander Khalifa Haftar and the government he backed in Benghazi. Its provision of new banknotes this year was not previously known.
“The Haftar family’s hegemonic control over eastern Libya poses a serious threat to the country’s entire banking system,” said Charles Cater, head of investigations at The Sentry.
The diplomatic source said it was “a major concern” that the Russians were printing dinars that were being converted on the black market into hard currency, impacting the dinar and ultimately being used to pay for Wagner-related debts or for the Africa Corps – the name of the Russian military presence in Africa that has succeeded Wagner group since the death of Wagner founder Yevgeny Prigozhin in 2023.
The Fifty Banknote
Most of the unofficial currency is in 50-dinar notes. The CBL issued a statement earlier this year identifying four kinds of 50-dinar note: those officially printed for the central bank, those printed in the past by Goznak for the eastern CBL branch under Hibri, and two new issuances that it called counterfeit.
The diplomatic source said one of those issuances was of higher quality and was printed in Russia and imported. The other less sophisticated notes appear to have been printed inside Libya, the source said.
The Libyan banking source and the eastern government source both said an illicit dinar-printing operation was taking place in eastern Libya.
Dinars are converted to hard currency either through black market money changers or via deposits made in eastern banks by shell companies that use import letters of credit to send U.S. dollars from the central bank to companies overseas, the three sources familiar with the matter told Reuters.
To counter the impact of counterfeit notes, the CBL announced in April that it would withdraw all 50-dinar notes from circulation by the end of August.
