The World Bank released its’ economic outlook report on Libya earlier this month and the findings are not painting a pleasant picture.
According to the report, the Libyan economy is suffering and chances for improval are compromised so long as political strife remains to be a factor. The report points out that despite “limited improvements” to the economy, the lengthy conflict and consistent instability are hindering growth potential; taking a large toll on the economy and the Libyan people.
The libyan economy is still affected by the 2016 recession wherein it is estimated that the overall GDP dropped to half of its’ pre-revolution level. Libya’s primary source of income, the oil industry, has been the most affected by political instability; steadily declining over the past 4 years. As a result, exports and budget revenues have hit an all time lowest record. In turn, incomes have continued to decrease and inflation has been steadily rising. Due to this, the overall purchasing power of the population has taken a hit.
The dire economic conditions enabled by instability “have increased poverty and exacerbated socio-economic exclusion”. Undoubtedly, it is everyday Libyans that are the most affected. The World Bank estimated that around 1.3 million Libyans do not have access to life-saving health care services and resources.
The correlation between political instability and decreased economic performance remains at the forefront of the issue; however, some point to pre-2011 structural issues as another cause exacerbating the economic crisis. Nonetheless, it is clear that without political stability the Libyan economy, and people, will continue to suffer.
The World Bank report concludes that addressing pre-2011 development gaps, diversifying the economy, and promoting private sector development will all help boost the economy. Yet, the primary factor highlighted as a way to improve the economy is the endorsement of a new functioning government.
Last week the Central Bank of Libya issued a report which stressed that Libya is “going through deep-rooted economic crisis and recession in several fields that make up the backbone of Libya’s monetary income.”
Nevertheless, the survival of Libya’s economy to date can be partially credited to the Central Bank that has remained intact as a single institution that serves both the West and East. The bank, lead by Governor Sadek Al-Kaber, has managed to support all government ministries and maintain a state budget in the absence of the parliament taking on that roll. It has also worked with international partners to ensure that Libya economy can continue to participate in the international landscape.
The report by the bank reinforced the need for the National Oil Company to recover and begin producing 1.2 million barrels per day, which is the level needed to balance the fiscal and oil sectors.
This conversation regarding economic stability comes about during a critical time for Libya- due to the ongoing LPA discussions. While it is unclear as to how politics in Libya will unfold; it is undeniable that regardless of the outcomes, economic conditions will be consequently affected.