Libya struggles to revive economy

2012-02-16 13:01
Tripoli - Oil exports are approaching pre-conflict levels and international sanctions have been lifted, but four months after fighting ended, experts warn that Libya's financial situation remains fragile.

The new leadership has inherited an economy in disarray, plagued by the corruption and mood swings of deposed ruler Muammar Gaddafi and his clan, who controlled Libya's key oil industry - and revenues - for more than 40 years.

State-run National Oil Corp said last week that oil production, which collapsed after the uprising against Gaddafi’s regime erupted a year ago, had reached 1.3 million barrels per day, in "record time".

The NOC chairperson said in November that Tripoli expected to reach pre-crisis levels of about 1.7 million bpd by the end of 2012.

The north African nation's gross domestic product fell by about 60% last year, but International Monetary Fund (IMF) projections say it could rebound with a near-70% expansion this year and 20% in 2013.

The lifting in December of most sanctions imposed by the UN Security Council and United States on Gaddafi’s regime was a boost for the transitional government, allowing it to access at least some of the billions of dollars of unused funds.

The release of some of the estimated $150bn in former regime assets has given the Central Bank of Libya (CBL) the funds needed to intervene in exchange markets, support the dinar and allow the government to keep paying civil servants.

Crisis of confidence

However, "despite the removal of UN sanctions on the CBL, the public sector's financial situation remains precarious," the IMF said in a mission report last month.

The government continues to borrow from the central bank to fund itself, but the CBL and commercial banks themselves are short of actual bank notes to match the demand.

The shortage in local currency continues to affect the lives of Libyans, creating a "crisis of confidence" with the banks.

National Transitional Council spokesperson Mohammed al-Harizi recently said the amount of dinars in banks had risen from 500 million at the fall of the regime in October to 1.5 billion now.

With stabilisation, inflation should be pulled down to below two percent this year from 14.1 percent last year.

The IMF says key short-term challenges include establishing fiscal discipline and reviving the banking system, while at the same time maintaining macroeconomic stability.

The unemployment rate, estimated at 26% before the conflict, has "probably" increased, it added.

In the medium and long term, Libya is under pressure to diversify its hydrocarbons-dominated economy, but also fight corruption and bureaucracy.

"The situation of the Libyan economy now is the same as it used to be under Gaddafi, and it could get worse," said Husni Bey, one of the most prominent businessmen in the Libyan private sector.


"The same corrupt lobby is still there and in the absence of justice and control, it is difficult to put an end to old practices," he added.

The leadership also needs to restore security and disarm Libya's various militias to encourage companies and foreign labour to return to the country, where major projects are still at a standstill.

The government insists there will be "no new contracts before the election" of a constituent assembly in June.

Britain and France, which took a leading role in anti-Gaddafi military operations before he was killed on October 20, are expected to win big contracts in Libya.

"But nothing is a foregone conclusion in this country," said a Western diplomat in Tripoli.

Read more on:    imf  |  muammar gaddafi  |  libya  |  north africa

Read News24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Inside News24

When is a mountain more than just a mountain? 2014-12-18 07:26

When it’s an adventure! A group of Old Mutual employees found out how much is enough courage, endurance and camaraderie to take on Africa's highest peak.


Joburg hot spots for cocktails, craft beer, tapas and wine!

It’s the season to be jolly – so we’ve rounded up some new Joburg hot spots!


I love summer.24

The craziest deaths of 2014
How to make this a sensual, sexy summer!
This is what South Africans Googled in 2014!
This hilarious song is your new holiday anthem

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go! - shop online today

2DAYS ONLY – 30% off Appliances

Coffee makers, blenders, fans, juicers and more. T&Cs apply. Shop now!

2 DAYS ONLY – 40% off books

Get 40% off when you buy 2 books. For two days only! T&Cs apply. Buy now!

Up to 50% off on outdoor gear

Save on chairs, blankets, cooler bags, umbrellas and more. Shop now!

Save on Samsung

Cameras, mobile phones, TVs, Tablets and more. While stocks last. Shop now!

Grand Theft Auto 5

Now available on PS4, Xbox One and PC from R649. Buy now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25


You may be emotionally defensive or reserved today. You need to step up today as there may be extra responsibilities to deal more

There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.