Monday, March 16, 2009

The Mysterious Libyan Coins


In my last post related to the economy in Libya, Khadijateri said "Are Libyans too lazy to carry coins? Are they [the coins] too heavy to lug around? Or is the problem that they are so difficult to count?".

I don't think any of these choices is the right answer :)

But it is not the first time that this issue has been brought to my attention....



Last year Khadijateri had already noted : "Another thing I can't understand is why people here [in Libya] hate using coins. When they raise the prices on goods in the shops they usually add a quarter of a dinar because that is the smallest banknote used here. When I first came to Libya, in 1989, using coins was common. It certainly would be better if they went back to using them again and then only raising the prices a few cents at a time instead of in big chunks."



I can't really state that Libyans hate using coins or are too lazy to do so, because we do use them overseas and we know how to and we also use them when available. The fact that at least in 1989 i.e . 20 years ago and some years after for sure, they were available is proof enough that we do love our coins. Are we too lazy or are the coins too heavy? Surely that can't be the case for all Libyans?

Our salaries are not always a perfect round number but would be something like this : 300 Dinars and 0.631 Dirhams, if I get this in cash then I would either receive 0.500 Dirham or 0.750 Dirham depending on the mood of our cashier. But most of us receive our money in our bank accounts and so those precious Dirhams accumulate and I like it this way. We also would love the prices not to rise in such increments as mentioned above because the smallest paper denomination is 0.250 (or 25 ) Dirhams. Why buy 5 breads instead of one only ?

"Until 1975, old coins denominated in milliemes (equal to the dirham) circulated. In 1975, coins were introduced in denominations of 1, 5, 10, 20, 50 and 100 dirham which bore the coat of arms of the Federation of Arab Republics. These were followed in 1979 by a second series of coins, in the same denominations, which bore a design of a horseman in place of the arms. ¼ and ½ dinar coins were issued in 2004. [1] 1, 5, 10, and 20 dirham coins are rarely used, if ever, as units of exchange. However, they still retain their status as legal tenders. [source]

See the old and new sets of coins here - but you need to scroll down to Libya:

The next logical question is why has the circulation of coins dwindled in Libya?

Theories:

(1) In the late 80's I remember reading in the local newspapers about the caravans of cisterns filled with coins that were busted on their way to cross the border to Egypt. Someone had been smuggling our coins outside the country. You can imagine how many coins can one cistern carry? But what would Libyan coins buy you in Egypt I used to think ? nothing really their value lay in the quality of the alloy they were made from.

(2) Greedy Libyan merchants were hoarding coins in order for the price increase to be large. Instead of 5 or 10 Dirham they would 'have' to raise it to 25 at least.

(3) The country was not minting enough coins.


Whatever it was the circulation of coins continued to decrease slowly but surely. At one point coins became so rare that I started collecting them each time I actually came accross some. I have a small jar full now. We learn to live with that especially during the sanction years, afterwards people were too busy consuming and becoming materialistic in their outlook. But now when prices have become astronomical due to inflation and our extreme hurry to catch up with capitalism many are wondering where are those elusive coins?
In my quest for the Libyan coins I saved an article from the Oea newspaper of November 8th 2008, issue no. 068 : " who is responsible for the non-circulation of coins? where have the coins that the Central Bank of Libya issued disappeared? Is it true that they are smuggled out of the country to be recycled? Is there a mafia that melts the coins to make sewage covers?".



The author confirms that at least one old man he knew had started throwing the coins in the rubbish as too heavy too carry around especially since they are useless with the spike in prices. Also the merchants have been hoarding those coins for decades as this is to their benefit, and yes a 'mafia' was busted smuggling coins because the alloy could be smolten into other useful things or sold as scrap metal and they would still make loads of money.

Once again this is a vicious circle, sometimes you don't notice things and when one does its quite late in the day.

For sure though that the following is true :


(1) The Central Bank of Libya (CBL) has been taking steps for some time now to combat this shortage by putting new coins into circulation at regular intervals. We've seen from the Wiki article above referenced that at least till 2004 some new coins have been punched out. Moreover, the CBL's website has a link to money issued and money taken out of circulation, and one of the sublinks refers specifically to coins. See the photo below, courtesy of CBL. We can see that there are 8 denominations ranging from 50 Dirhams to 1 Dirham and all are valid!



(2) The merchants have been exponentially increasing prices following anticipated pay rises and that means for sure that they have been hoarding coins for a long time.


The lack of coins actually hurts our economy because it affects:
(a) salaries
(b) purchasing power
(c) accounting
(d) it wastes public money

So it's definitely a combination of circumstances but I can't believe that as stated at the beginning of my post that we are so irresponsible as to throw money or are simply lazy.

For the last 3 months or so it has become very very common to get change in coins at least in 25 and 50 denominations which I'm always happy to accept and use, I've been surprised with a few 5 Dirhams as well in some government offices. Basically there is an effort and the supermarkets cashiers are full of shiny gold coloured coins. Hopefully this a good sign !





10 comments:

programmer craig said...

I have to admit, I hate using coins too. I save them in a jar and take them down to the coin counting machines to exchange them for bills, whenever my jars fill up! I never carry coins, and I often put my change in the donation cans that stores often have on the counter, rather than filling my pockets with coins. So I can vouch for the fact that at least some people besides Libyans are too lazy to use coins! :)

khadijateri said...

Thanks for posting this informative article! Much appreciated!

Improvedliving said...

I also got so many coins. It is really awful for sure.

Virtual real estate

NuNa said...

i m too hate using coins, really i don't know why , but sometimes i feel it makes me confuse wen i have it in my bag. My dad told me long time ago they used it ( graj) to much wen bought and sold food and drink.I heart there are some people who aren't Libyan take Libyan coins to their county until these days. some of my cousins told me why they do that but really i forget now. and there are some Libyan guys take coins when they go out side spacial wen travel to Europe and turkey to eat or drink from machine .....

Chris in MB said...

Since coins are only useful for parking meters and hamburgers at the drive-throughs here these days, all my coins end up in my vehicles ashtrays now that I quit smoking.
I suspect that is true for many others. I wonder how many millions of dollars are stockpiled in vehicles. :P

btw, If any Libyans out there wish to contribute to the problem feel free to send me some, Libyan coins would be an interesting novelty here. :D

MusicLover said...

"Are Libyans too lazy to carry coins?

Better worded "Are men lazy to carry coins?

Have you ever seen what a woman's wallet looks like comparing to a man's wallet and whats inside it :-). Man's wallet does not have a section for coins and man does not like to carry coins in his pocket because it makes annoying sounds when he walks and thats not including house,office and car keys plus men do not use handbags.

Thank god that most Americans use debit cards to pay groccery or other items in our present time, or else I would be stuck in lines at the cash register behind ladies counting their pennies like in the past.

Since we are talking about Libyans are lazy to use coins but what drives me mad in USA that Americans do not save their pennies, they just leave them on the counter or throw them. When you go to the shopping malls or parks you will find fountains full of pennies and they do encourage you to throw pennies specially kids love to do this, and the pennies are collected for charity organizations. It is smart move because they aware that Americans do not save their pennies.

http://www.coinstar.com/us/html/a-home

Married men they take out their coins, either they place it on the night table and the wife takes it and adds it to her wallet to pursue her shopping addiction or he puts in his kids piggy banks.

It is has nothing to do being a Libyan or not, it is just man's habit.

As regarding for coins disappearing in Libya, reminds me of same situation occured in Egypt in the past. The cost of a newspaper,bus ticket, trolley ticket, bread were 3 piasters, you do not get your change in coins but matches, it used to piss my father big time. This kind of a situation was an extra source of income for the bus, metro, trolley conductors,the Newspaper Kids. The prices were increased to 5 piasters, which there was no shortage of 5 piasters coins but I felt sorry for those struggling families but not for the restaurant and shop owners.

"The lack of coins actually hurts our economy because it affects:
(a) salaries
(b) purchasing power
(c) accounting
(d) it wastes public money"


The blame falls on the goverment's stupidity in their monetary policies not on merchants.

Libya eyes more property in west

http://www.ft.com/cms/s/0/5bbad6a6-1360-11de-a170-0000779fd2ac.html

Private equity firms beat path to Tripoli

http://www.ft.com/cms/s/0/d520d102-1325-11de-a170-0000779fd2ac,dwp_uuid=cf8c5ee0-aa15-11da-96ea-0000779e2340.html

Published today in Financial Times those were interesting articles but better the money is spent in upgrading the universities, schools, hospitals and etc..........

Pink Floyd - Money
youtube.com/watch?v=Xl6NfQyNLto

MusicLover said...

Pink Floyd - Money

youtube.com/watch?v=Xl6NfQyNLto


I was not sure I added the link and thank you for interesting intellectual post but please remove the restriction on commenting on your blog and I do agree with PH views regarding censorship, as a reader as PH, I do not like someone insulting my intelligence and playing mind games.

At last thank you again for enjoyable post.

Rose Bud said...

Libyan money is already cumbersome enough without adding coins to the equation. I guess it would be ok if there were debit or credit cards and the coins didn't have to be lugged around. Yes, lugged because the old Libyan coins are hefty. Heavy. lol

Chris in MB said...

MusicLover said, "...you will find fountains full of pennies and they do encourage you to throw pennies specially kids love to do this, and the pennies are collected for charity organizations."
I'm surprised, no wishing wells in Libya?! I thought it was a universal thing.

Highlander said...

Programmer Craig, seems from what other guys are saying here that hating coins is a 'male' thing :P

Khadijateri, you're welcome, glad you enjoyed it.

Improved living- not sure I understood but thanks for reading my blog

NuNa yes I heard such stories as well. As for the guys apparently the Libyan coins are great for the automatic machines and also for the electric meters in the West. But I won't tell their secret let them enjoy it :)

Chris remind me to send you some Libyan coins :)
As for wishing wells with coins I think that's a Western concept if I'm wrong someone please correct me here.

ML and Rosebud, there is a protoplasm form of local debit cards here in Libya but mostly used in some stores which accept it and at the ATM machine to withdraw money, obviously it's still in the early stages. But I'm still happy to use the coins LOL.

ML thanks for the links I enjoyed them as well. By the way, I post all comments even SPAM as you noticed (unless it runs in 100 pages long articles, but having the 'restriction on commenting' as you call is because in the past many readers got carried away and real lives were affected. Since I'm not available 24h/7 it is better to moderate and release the comments when I'm actually online then have a crisis unfolding, anyway those who wish to discuss always manage to do so and keep to the topic at a slower pace. Thanks for your understanding. My email is also available if you wish to add somethng more.

Rosebud, I agree I wish Libyan paper currency was smaller in size to fit my wallet. Did you see the new releases, nice colours though right ? as for the coins they are lovely :P