Libya’s Prime Minister Al-Baghdadi Ali al-Mahmoudi said the government was discussing the possibility of giving a bigger role to foreign banks to help expand the provision of credit to businesses.

Foreign banks have been slow to enter the North African oil producing country despite a 2005 law permitting them to open branches, largely because of what bankers call bureaucratic regulation and administrative procedures.

Mr Mahmoudi made his remarks in a televised discussion on the economy on Tuesday evening that also included Libyan leader Muammar Gaddafi and Libyan businessmen.

“We have talked a lot about the necessity to search for banks that will help and activate (the economy), either through partnerships with foreign banks, or opening up to foreign banks, to give permission to foreign banks to open in Libya to facilitate the movement of credit (to businesses),” Mahmoudi told State television.

Libyan analysts said the government was well-disposed to taking steps to attract foreign banks to the country.

Mr. Mahmoudi noted that as things stood at present, businesses were having difficulties getting loans.

Businessmen have complained that the banking system, nationalised in 1970, remains highly centralised.

The government passed a law in 1993 that allowed the establishment of private sector banks, but the sector remains dominated by State-owned institutions.

The few foreign banks that have representative offices in Libya include Bahrain-based Arab Banking Corporation and Malta’s Bank of Valletta.

In January 2006, leader Muammar Gaddafi called for Libyan authorities to offer opportunities to foreign banks to invest in Libya, saying it would benefit the economy and Libyans had nothing to fear.

“The mentality which resists foreign investment is a backward one,” the official Jana news agency quoted him as saying at the time.