Mediaboss Marketing

Libya made significant progress towards ending its decade-long conflict and moving towards reunification in 2021. This resulted in a strong rebound of oil production and economic activity, and a consequent upswing in fiscal, trade, and current account balances. Nevertheless, households still struggle with food insecurity, poverty, and poor public service delivery. Challenges with organizing national elections for December 2021 raise the specter of a deteriorating political and security situation which would threaten progress towards peace and recovery.

Following a massive contraction of the hydrocarbon sector in 2020, driven by intensifying conflict and a blockade of oil terminals and fields, the sector, and in turn the Libyan economy overall, are witnessing a significant rebound. Oil production has averaged 1.2 mb/d during the first half of 2021, compared to an average of 0.3 mb/d during the first 9 months of 2020 and 0.9 mb/d during the fourth quarter of the year.

Should the political process progress positively and the security situation remain stable, Libya will continue its path of economic recovery. In the coming months, if presidential and parliamentary elections and the reunification of public institutions proceed, and oil production persists, . In turn, trade and current account balances are projected to record double digit surpluses as a share of GDP. The fiscal balance may record a surplus, as well, given the strong rebound of oil production and exports and following the devaluation of the currency (which has reduced the cost of financing public sector salaries and goods and services using dollar-denominated oil revenues). This, however, will depend on whether there are any major deviations in spending patterns compared to the first half of the year.

Read the original post:
Libya's Economic Update October 2021 - World Bank

Since the delay of national elections in December 2021, political and security tensions and oil production disruptions have escalated. The confirmation of a new cabinet by the House of Representatives has returned Libya to a state of institutional division. While soaring global oil prices will have a positive impact on growth and fiscal and external surpluses, this hinges on the persistence of oil production. Meanwhile the population faces increasing food insecurity as global wheat prices rise.

While official national accounts data have been unavailable for much of the conflict period, rough estimates of GDP can be made using data on night-time lights, oil production, and government spending. (average of 1.2 million barrels per day (mb/d) compared to 0.4 mb/d in 2020). However, since mid-December 2021, there have been multiple production disruptions due to weather-induced port closures, infrastructure maintenance issues, and shutdowns by armed groups. Oil production in January 2022 recorded its lowest level since October 2020 (1.08 mb/d).

It is impossible to forecast economic outcomes with any degree of confidence due to the high level of uncertainty surrounding political and security developments. If oil production and exports continue without major extended disruptions, Libya will benefit from soaring global oil prices which will translate into higher fiscal revenues and inflow of hard currency. This will positively affect the trade, current account, and fiscal balances. Libya may face short-term wheat supply disruptions, higher wheat prices, and in turn higher inflation and lower consumption.

Read more here:
Libya's Economic Update April 2022 - World Bank

New World Bank report details how the countrys trajectory for economic recovery will remain linked to the security and political environment; implementing urgent reforms will increase the likelihood of a successful resolution and recovery.

Tunis, April 22, 2021 The Libyan economy faces major challenges, including recurring disruptions to the oil and gas sector, the fragmentation of state institutions, and ongoing conflict.

The new spring 2021 edition of the Libya Economic Monitor details how, for most of 2020, the performance of the Libyan economy was the worst in recent record. A 9-month blockade that began in January 2020 cut the countrys crude oil to less than one-sixth of 2019 valuesthe worst monthly performance since the beginning of the recent conflict.

The blockade was debilitating for Libyas acutely undiversified economy, which relies on oil and gas for over 60% of aggregate economic output and over 90% of both fiscal revenue and merchandise exports. Fiscal revenues lost from the blockade amounted to around US$11 billion for the year, according to the Central Bank in Tripoli. These problems were exacerbated by the COVID-19 pandemic, which inflicted further economic and social dislocation on the war-torn country, which already suffered from a degraded healthcare system. Overall, the Libyan GDP plunged by 2020 despite resuming oil production in the last quarter.

Libya faces enormous economic challenges and desperately needs unified institutions, good governance, strong political will, and long overdue reforms, saidJesko Hentschel, World Bank Country Director for the Maghreb and Malta. The Libyan people have gone through so many tribulations. The security and political environments have seen signs of improvement lately. The road ahead will not be smooth, but it provides hope for peace, stability, and development.

The economic monitor estimates that the Libyan economy will partially recover in 2021 from the slump in 2020. GDP growth is forecast at 67% in 2021 in real terms. Oil and gas output will remain the main driver of economic growth in 2021. Higher international oil prices will help support the overall rebound in oil output, filtering through stronger government consumption and investment, and in turn supporting a recovery in private consumption. Growth in the non-oil sector will remain subdued, impeded by ongoing conflict; poor provision of services, including power; and the lingering effects of the COVID-19 pandemic.

The agenda for social policy and institutional reform is full and needs urgent attention. Besides peace and stability, the country needs urgent infrastructure investments and social assistance to vulnerable groups, including a more rapid and orderly vaccine rollout. With diminishing conflict and improving security conditions in large parts of the country, the Libyan government can focus on improving the provision of public services and creating conditions for a quick recovery in the non-oil sector.

The World Bank is committed to supporting Libya with technical assistance and analytical services, as well as Trust Fund and grant financing. The Banks priorities, set out in the Country Engagement Note (CEN) in February 2019, consist of two pillars: Accelerating Economic Recovery and Restoring Basic Service Delivery. The program focuses on actions that will concretely improve lives, with the World Bank Group developing its knowledge base for longer-term engagement with Libya through Advisory Services and Analytics (ASA) as well.

Excerpt from:
Libya is Aspiring for Recovery and Healing, but Challenges Abound

Libya is struggling to cope with a trifecta of crises, including the civil conflict, the COVID-19 pandemic and most recently, the impact of the Russia-Ukraine crisis. Notwithstanding the tempering of conflict intensity since 2021, the Libyan economy has been battered by the conflict. GDP per capita estimates in 2021 stood at about half of its value in 2010 before the start of the conflict. Since 2020, the population has been hit by multiple waves of the COVID-19 pandemic. In addition, food insecurity has worsened, precipitated by the Russia-Ukraine crisis and the resulting shortages and price increases for staple foods in the domestic market.

While Libya witnessed a significant rebound in economic growth in 2021, it has been experiencing volatility in the hydrocarbon sector, the mainstay of the economy, in 2022.

Despite the significant limitations faced by the two key sources of data on prices, they offer a consistent story of increasing inflationary pressures during 2021 and through the first quarter of 2022. Prices of essential goods (food and drinks, housing, electricity, water, gas and other fuels, and transportation) are the main contributors to Libya's higher official inflation rate since 2021.

The fiscal balance witnessed a massive reversal from a 64.1 percent of GDP deficit in 2020 to a 10.6 percent of GDP surplus in 2021. This resulted from the jump in oil production and prices and the exchange rate devaluation (much of the spending (particularly wages) was denominated in LYD, whereas 98 percent of revenues in 2021 were sourced from hydrocarbons denominated in US$). Libya's debt stock is large but manageable as long as hydrocarbon production and exports persist.

Libya's trade and current account balances rebounded in 2021 and early 2022, thanks to recovering oil exports and receipts. Estimates reveal that Libya's reserve position remains very comfortable. The official exchange rate remained relatively stable throughout 2021, but depreciation pressures are increasing.

The economic outlook is uncertain. It is impossible to forecast economic outcomes with any degree of confidence due to the high uncertainty surrounding political and security developments. However, if Libya manages to maintain or ramp up oil production and exports compared to 2021, or at least avoid extended disruptions, it could benefit from soaring global oil prices, which would translate into strong economic growth, higher fiscal revenues and an inflow of hard currency. This would positively affect the trade, current account, and fiscal balances.

Downside risks are high. The primary downside risk is a backslide into violence and armed conflict. Further outbreaks of COVID-19 and/or the emergence of new variants pose a risk. The war in Ukraine may lead to further supply chain disruptions and sharper than expected agricultural product price increases. High global fuel prices may raise the prices of other imported goods, leading consumers' purchasing power to decline and likely resulting in lower consumption, increased food insecurity, and greater use of negative coping mechanisms by vulnerable households. The presence of rival governments in the East and West, and ongoing negotiations around the management and use of oil revenues, may complicate government spending, thereby impeding the state's ability to deliver public services and finance development projects. A sharper than expected slowdown in global growth could reduce global oil demand, resulting in reduced exports, government revenues, economic growth, fiscal and current account balances, and foreign reserves.

Go here to see the original:
Libya Economic Monitor September 2022

Libya faces considerable hurdles in the drive for a more durable economic recovery following the resumption of oil production and exports. The countrys political leaders must address three short-term challenges in the policy agenda. First, the National Oil Corporation and the Central Bank of Libya must reach an urgent solution on the oil revenues held offshore at the Libya Foreign Bank. While fiscal transparency is a worthy objective, the impasse over

oil revenue deposits risks damaging government activities and fiscal operations. Second, the GNA in the west and the IG in the east must cobble together not only a unified but, more importantly, a reasonable budget for the remainder of 2021 that is consistent with the countrys development priorities and aligned with its institutional capacity. While they have struck an agreement for a unified budget for January-February 2021, they have left budget unification plans for the remainder of the year in limbo. Third, the competing branches of the Central Bank of Libya should advance the second generation of monetary reforms after the devaluation of the official rate in January. The next items on the agenda are the unification of the two branches of the central bank; the integration of the payments systems in the west and the east, and the resolution of liquidity problems both in the banking system and in the wider economy.

Read the original post:
Libya Economic Monitor - Spring 2021 - worldbank.org