The International Monetary Fund [IMF] has said that the economic fortunes of Libya, North Africa’s second-largest oil producer, will depend upon oil and gas production for the foreseeable future.
Hydrocarbon production in the troubled country is projected to grow by about 15% to around 1.2 million barrels per day in 2023 following an increase in oil production from 1 million bpd in 2022, and increase gradually thereafter.
Following discussions for the 2023 Article IV consultation for Libya in Tunis, Tunisia, during March 11 to 17, IMF said, “Looking ahead, assuming fiscal spending remains contained, the baseline projection is for gradually declining fiscal and external surpluses over coming years.
“Looking ahead, the stability of the exchange rate will remain an important anchor for monetary policy.”
Libya’s economy is anticipated to grow by 17.9% in 2023 after shrinking by an estimated 18.5% in 2022, according to IMF data. However, the country faces the challenge of reducing its reliance on hydrocarbons, while fostering stronger and more inclusive private sector-led growth, the IMF said.
The speed at which the international community is mobilizing to reduce carbon emissions and recent leaps in clean energy technology pose a risk of disorderly adjustment for economies dependent on oil, it said. Libya is at risk of falling behind these important global trends, it said.
“Structural reform efforts should focus on strengthening institutions and developing a more purposeful and transparent economic strategy for the future,” the IMF said.
“This would be an opportunity to rally the population behind a clear plan to optimize the use of oil revenue to achieve economic diversification and improve living standards and inclusivity.”
Libya has endured more than a decade of conflict since the 2011 revolt that toppled Muammar Qaddafi, with a myriad rival militias, foreign powers and governments vying for influence.
The country is split between a supposedly interim government in the western capital, Tripoli, and another in the east nominally backed by Field Marshall Khalifa Haftar.
By Ken Okoye