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Libya

Libya

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Key Facts

  • Capital: Tripoli
  • Region: North Africa
  • Official language: Arabic
  • Independence Day: December 24, 1951
  • Area: 1,760,000 sq km
  • Population (2018): 6.7 million
  • REC membership: AMU, COMESA, CEM-SAD
  • WTO membership: Observer
  • GDP (2018): US$ 48.364 billion
  • GNI per capita (2018): US$ 6 400
  • Currency: Lybian Dinar

Economic overview

Real GDP growth slowed to an estimated 4% in 2019, due to lower oil prices. Inflation, after declining in 2018 and the first quarter of 2019, rebounded to an average above 10% in 2019 because of the intensified conflict in Tripoli. The fiscal deficit worsened to 10.9% of GDP in 2019 from 7.4% in 2018 (but still much improved from 43% in 2017). The fiscal stance was slightly worse in 2019 due to lower oil prices despite higher oil production, at 1.15 million barrels a day in the second quarter of 2019, up from 0.97 million in 2018.

Of the fiscal spending in 2019, 58.4% went to salaries, and 18.2% to subsidies for food, health, energy, and education. A reform of subsidies, planned for 2018, was postponed due to the political context. Capital spending increased to 5.3% of spending in 2019 from 4.7% in 2018, but was still much lower than the 43.5% in 2010 and left gaps in social and economic infrastructure. The current account balance slipped to an estimated deficit of 0.2% of GDP in 2019, down from a surplus of 2% in 2018, because of the reduced price of oil exports.

In 2020-21, oil prices are expected to fall while production should increase as Libya continues to receive an exemption until March 2020 from the quotas under an extended OPEC agreement to curb oil production.

Libya is well endowed with hydrocarbon resources. Its proven crude oil reserves were 48 billion barrels at the end of 2018, the ninth largest globally and the largest in Africa, accounting for 38% of the continent’s reserves. Only 25% of Libya’s territory has been explored for hydrocarbons. These resources provide ample financial leverage, a positive long-term fiscal outlook, and very low debt. Unlike other post-conflict countries, Libya has the financial resources to rebound quickly. If well and efficiently managed, the resources could power economic and social recovery and reconstruction. Reconstruction, along with improved political stability and security, could diversify the Libyan economy from oil and offer better prospects for an inclusive society.

Economic diversification is a key priority. Over 2014-18, the oil, gas, and related extractive sectors accounted for more than 65% of GDP, more than 95% of export earnings, and 96% of the budget. So, the Libyan economy remains extremely vulnerable to oil production shocks and oil price fluctuations. Rapid diversification from hydrocarbon resources is essential for a stronger, resilient, and more inclusive economic growth.

Political stability, and structural reforms centered on a more conducive business environment for private investment are needed. The 2019 Doing Business report ranked Libya 186 of 190 countries. Libya currently ranks 187 in registering property, 187 in dealing with construction permits, and 186 in the ease of getting credit.

The private sector also faces challenges in recruiting skilled and qualified individuals. According to the 2018 Human Development Report, Libya’s Education Index ranked the country 119 of 189 countries. This problem is likely to be exacerbated over the next decade, since conflicts interrupt schools and universities.

The economic and social infrastructure has been severely damaged. Since 2014, Libya has experienced serious power shortfalls. Health care services have deteriorated, with only 17.5% of hospitals functional in 2018. Because of the ongoing conflict, 43% of the population relies on trucked-in water for drinking – before 2011, most major towns and villages enjoyed water services, even though Libya is among the world’s most water-scarce countries.

Last updated: April 2020