經濟研究
Libya

Libya

Population 6.6 million
GDP 2,891 US$
E
Country risk assessment
E
Business Climate
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Synthesis

major macro economic indicators

  2019 2020 2021 (e) 2022 (f)
GDP growth (%) 13.2 -59.7 123.0 5.5
Inflation (yearly average, %) 0.2 2.8 21.0 8.0
Budget balance (% GDP) 19.0 -53.0 17.0 10.0
Current account balance (% GDP) 1.1 -12.2 19.0 15.0
Public debt (% GDP) 105.0 155.0 n.d. n.d.

(e): Estimate (f): Forecast 

STRENGTHS

  • Large oil and gas reserves (the largest in Africa)
  • Very low external debt
  • Large foreign exchange reserves, sovereign wealth fund
  • Strategic position in the Mediterranean, proximity to Europe

WEAKNESSES

  • Extreme dependence on hydrocarbons (48% of GDP)
  • Economic and financial fragmentation against a backdrop of political and tribal divisions, fuelling insecurity
  • Significant insecurity with the presence of armed groups, including mercenaries (Russian, Sudanese, Serbian, Ukrainian, Syrian). These groups are often manipulated by foreign powers (Turkey, Russia, Emirates, Egypt) with conflicting economic and/or strategic interests
  • The south-west of the country (Fezzan), which suffers more from poverty than other regions, is having to deal with a rise in trafficking (human, arms, drugs) and tensions between Tuaregs and Toubous
  • Non-compliance with UN arms embargo
  • Oil smuggling, especially with Tunisia
  • Poor business environment (186/190 in the Doing Business 2020 ranking): corruption, bad governance, poor public services
  • Destruction of much of the country's infrastructure, especially health and education
  • Lack of electricity supply
  • Selective currency access for importers

Risk assessment

A difficult and delicate reunification process

Efforts to guide the institutional, political, economic, financial and military reunification of the country continued throughout 2021. Following the UN-brokered ceasefire agreement of October 2020 between Marshal Haftar's Libyan National Army (LNA) in the east and the Tripoli-based Government of National Accord (GNA) in the west, a three-member Presidential Council representing the three regions and chaired by Mohamed al-Menfi, and an interim Government of National Unity (GNU), headed by Prime Minister Abdelhamid Dbeibah and bringing together the rival groups, were established in March 2021 by the 75-member UN-appointed Libyan Political Dialogue Forum. However, in September 2021, the eastern-based House of Representatives passed a dubious vote of no-confidence in the GNU on the grounds that the government had exceeded its interim powers. The prime minister declared that he would continue to fulfil his duties. Despite the fact that the electoral process and the role of the president were unilaterally decided by the House and contested by the western-based High Council of State (Senate), presidential and parliamentary elections are scheduled for this year at an unspecified date. A constitutional referendum is also planned. This timetable deviates from that initially envisaged in the Berlin Process under the joint presidency of Germany, France and Italy, and under UN supervision, which made the holding of elections conditional on the adoption of a constitution, reunification of the country, which has been divided since 2014, and departure of the estimated 20,000 foreign fighters. This withdrawal, steered by the Libyan Joint Military Committee under the supervision of the United Nations Support Mission, which was supposed to take place in January 2021, will depend on the goodwill of the fighters’ backers. Problems and uncertainty surround acceptance of the election results, as well as the next steps towards reunification (reunification of the two central banks, banking systems and armies) and the end of external interference.

 

An oil- and security-dependent economy

The dizzying growth of 2021, linked to the resumption of oil activity, will give way to a more reasonable growth rate in 2022, as oil production rises from the 2019 level of 1.15 million barrels per day (b/d) to 1.25 million, while average Brent crude prices remain favourable. This will affect exports (48% of GDP), of which oil and gas make up 87% and 5%, respectively. With exports set to outpace imports, the contribution of trade to growth will remain positive. Obviously, any new security attack on facilities (blocking ports, sabotaging pipelines) would call this scenario into question. Household consumption (68% of GDP in terms of demand) will benefit from this oil boom, but also from the improved institutional situation. Inflation, which surged in 2021 following the 70% devaluation of the official dinar rate in January, should ease. However, a deterioration in the health situation, which is still possible, with only 7% of the population fully vaccinated as of 4 November 2021, would cool household sentiment. In addition, there is insufficient cash availability at banks, due to the reluctance of economic participants to deposit their assets. Investment will remain low. Despite the strong potential, foreign investors remain cautious, due to insecurity and the dilapidated state of the country’s infrastructure. However, several foreign companies have decided to carry out development drilling in the Sharara field, the national oil company (NOC) and Total will launch the construction of gas projects worth USD 3 billion, while ENI and Total are set to work on two photovoltaic projects. In February 2021, the Tripoli-based NOC saw the return of its breakaway eastern branch. However, the NOC’s powerful chairman Mustafa Sanalla continues to have a stormy relationship with the energy minister, reflecting the stakes involved in controlling oil resources. Public investment, hitherto ephemeral, should benefit from the improved institutional and security situation, as well as from the creation of a fund for the development of the “oil crescent” region and the southeast, with a view to sharing the oil windfall more effectively.

 

Surplus accounts thanks to oil and comfortable reserves

The budget for 2021, which was to be agreed on only at the end of the year because of “reunification” challenges, showed a substantial surplus, thanks to the surge in oil revenues (55% of revenues). The 2022 budget is also expected to show a surplus, albeit a smaller one due to a bigger increase in expenditure, in which salaries and subsidies account for a very large share. The "two" central banks and local commercial banks will therefore not need to be called upon. Public debt, which is mainly domestic, should therefore decrease.

 
Hydrocarbon exports will maintain the considerable surplus in the balance of goods, which will be only slightly impacted by the services deficit linked to hydrocarbon development. The country's external debt is only 14% of GDP and the reserves of the two central banks still stood at USD 50 billion at the end of 2020, despite being drained over the year to finance the budget and provide foreign currency to importers. The currency's peg to the Special Drawing Right (SDR), the IMF’s unit of account, is not expected to be threatened. In November 2021, the parallel rate was only 4% higher than the official rate. In addition, the Libya Investment Authority, the country’s sovereign wealth fund, held over USD 68 billion at the end of 2019, although these funds have been frozen since 2011 by UN resolutions.

 

Last updated: February 2022

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