Supporting the Libyan dinar should not mean defending the exchange rate alone, says Dr Najat Altorjman, Corporate Governance Researcher at the Sunderland Business School of the University of Sunderland.
If the objective is to strengthen the purchasing power of the dinar, we need to look beyond the exchange-rate figure itself, Altorjman says.
The Corporate Governance Researcher says the IMF’s 2026 assessment highlights the link between large fiscal deficits, exchange-rate pressures, reserves and inflation. It also stresses that exchange-rate adjustment alone cannot substitute for fiscal reform. So, what can Libya actually do to strengthen the foundations of its currency?
The answer requires more than a single monetary measure. It requires better coordination across:
• Public expenditure and fiscal discipline
• Foreign-exchange demand and transparency
• Banking and productive finance
• Digital payments and financial visibility
• Domestic production and reduced import dependence
• Financial integrity and institutional coordination
She points out that Libya’s institutional and political fragmentation makes imported solutions difficult to apply without adaptation. The real question is therefore:
How can we design financial and economic solutions that work within Libya’s own institutional reality?
This is where there is significant potential for locally designed financial innovation. The goal should not simply be a stronger exchange rate. It should be a stronger economic foundation for the dinar.
On the question of how can Libya strengthen the purchasing power of the Libyan dinar?
The discussion often starts with the question of how can we strengthen the dinar’s exchange rate?
But, Altorjman says, the more important question is: How can we strengthen the purchasing power of the dinar in light of the realities of the Libyan economy? These are not necessarily the same question.
Recent economic developments have shown how fiscal pressures, foreign-exchange demand and inflation can interact to weaken household purchasing power. The IMF’s 2026 assessment of Libya highlighted the pressure that large fiscal deficits are placing on the exchange rate, reserves and inflation, while also stressing that exchange-rate adjustment alone cannot substitute for fiscal reform.
This raises a practical challenge. Libya cannot simply import solutions from other countries. Any serious solution has to work within a difficult institutional environment characterised by political and institutional fragmentation, competing interests, and limited coordination across public institutions.
So perhaps the starting point should not be: What is the ideal monetary policy but rather: What can actually be implemented within Libya’s existing institutional reality?
Altorjman says there are several areas that deserve serious attention:
1/ Linking public expenditure more closely to measurable economic outcomes.
2/ Improving the transparency and traceability of government spending.
3/ Strengthening the banking system’s role in financing productive economic activity.
4/ Expanding digital payments in ways that reduce informality and improve financial visibility.
5/ Developing better mechanisms for monitoring foreign-exchange demand and import financing.
6/ Protecting vulnerable households while gradually reducing inefficient forms of public expenditure.
7/ Connecting financial-sector data across institutions to support evidence-informed decisions.
The objective should not simply be to defend a number on an exchange-rate board. It should be to build an economic and financial system in which the dinar has stronger foundations: more productive spending, greater financial integrity, better information, stronger institutions, and greater confidence.
This is where innovation becomes important. Not innovation for its own sake, but solutions designed around Libya’s actual institutional constraints, Altorjman concludes.
Dr Najat Altorjman is a Corporate Governance Researcher, founder of Financial Integrity and Public Spending Logic (FISL) and Banking Governance & Financial Integrity in Libya, of the Sunderland Business School at the University of Sunderland.
