UN lifts sanctions on Libya's key banks Published duration 17 December 2011

image caption Libya says the funds are needed to pay employee salaries and keep basic services running

The UN Security Council has lifted sanctions on Libya's central bank and its foreign investment bank, to help the country deal with a cash crisis.

The move clears the way for the new government to unlock billions of dollars of assets held abroad.

The US and the UK followed suit shortly afterwards.

The Libyan banks' foreign assets were frozen earlier this year as part of sanctions against former Libyan leader Col Muammar Gaddafi.

On Friday, the UN Security Council decided to lift the sanctions on the Central Bank of Libya and its investments subsidiary - the Libyan Foreign Bank.

Last Friday, the council agreed to unfreeze the assets - unless there were objections - by 17:00 local time (22:00 GMT) on 16 December. As that deadline passed, no objections had been received, the diplomats in New York said.

The UK Foreign Secretary, William Hague, said that the move "marks another significant moment in Libya's transition".

"It means that Libya's government will now have full access to the significant funds needed to help rebuild the country, to underpin stability and to ensure that Libyans can make the transactions that are essential to everyday life," Mr Hague said in a statement.

He added that London would now free some £6.5bn ($10bn) held in Britain.

US Defence Secretary Leon Panetta is due to make a visit to Libya on Saturday.

Libyan 'responsibility'

Following the UN decision, the White House said in a statement that "the United States rolled back most US sanctions on the government of Libya to keep our commitment to the Libyan people".

The US Treasury said that it would "allow for the release of more than $30bn in blocked central bank and LAFB (Libyan Arab Foreign Bank) assets.

"The Libyan government now has the ability and responsibility to manage these funds," the Treasury said.

The interim government in Tripoli has recently stepped up calls for the release of some $150bn (£96bn) held abroad to pay employee salaries and keep the country's basis services running.

image caption Libyan oil refineries are slowing rebuilding productivity to pre-uprising levels

Some sanctions were eased after the fall Col Gaddafi's regime, but the process of releasing the bulk of the money has been very slow for legal and technical reasons, the BBC's Barbara Plett in New York reports.

Diplomats say that is because of uncertainty in the countries holding the assets as to who legally owns the funds, and whether the Libyan leadership is united enough to be trusted with the cash, our correspondent adds.

The UN Security Council imposed sanctions on Col Gaddafi's regime in February. They included an arms embargo and asset freeze.

In August - following the fall of the regime - the UN agreed to unfreeze Libyan dinars worth about $1.5bn (£950m) being held in UK banks.

At about the same time the UN agreed to a US request to unblock $1.5bn in frozen Libyan assets.

The uprising virtually shut Libya's oil industry, and exports only resumed in September.