December 19, 2017 / 3:07 PM / 2 years ago

Eastern Libyan parliament approves new central bank governor

BENGHAZI, Libya, Dec 19 (Reuters) - Libya’s eastern-based parliament approved a new central bank governor on Tuesday, deputies said, a move likely to cement financial divisions as the country grapples with political turmoil and economic crisis.

The oil producer has two governments, a U.N.-backed one in Tripoli and an eastern-based administration allied to the House of Representatives, part of a power struggle since the toppling of Muammar Gaddafi in 2011.

The east has set up a separate central bank branch issuing its own banknotes in competition with the headquarters in Tripoli headed by Sadiq al-Kabir.

The House of Representatives based in Tobruk approved as new governor Mohamed Abdelsalam al-Shukri by a vote of 54 of 107 MPs attending, deputies said. Shukri is a veteran central banker who served in the central bank under Gaddafi.

“He will replace Sadiq al-Kabir,” said deputy Khalifa al-Dairi. The lawmakers dismissed Kabir in 2014, but he refused to leave, so they appointed his deputy Ali Salim al-Hibri as head of the eastern bank, which Shukri will now run.

There was no immediate reaction from the central bank in Tripoli.

The House of Representatives is the internationally recognised parliament, but is caught up in the greater conflict. It was elected in 2014 with a mandate of just 15 months and has been gripped by divisions. Only a fraction of its originally planned 200 lawmakers attend sessions.

It has not approved the Tripoli government and has allied itself with the eastern military commander, Khalifa Haftar, who on Sunday declared the administration set up through U.N. mediation to be obsolete.

Western powers fear the central bank division will make it more difficult to resolve a cash crisis — loss of oil revenues and the reluctance of rich people to deposit money in insecure banks are making banknotes scare across Libya.

The Tripoli-based government had on Monday called on Hibri and Kabir to urgently work together to solve the economic crisis. (Reporting by Ayman al-Warfalli, writing by Ulf Laessing, editing by Larry King)

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