1934 7685 002.2024.issue 206 en

IMF Country Report No.
24/206
LIBYA
2024 ARTICLE IV CONSULTATION—PRESS RELEASE;
July 2024 STAFF REPORT; AND STATEMENT BY THE EXECUTIVE
DIRECTOR FOR LIBYA
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions
with members, usually every year. In the context of the 2024 Article IV consultation with
Libya, the following documents have been released and are included in this package:
• A Press Release summarizing the views of the Executive Board as expressed during its
July 1, 2024 consideration of the staff report that concluded the Article IV consultation
with Libya.
• The Staff Report prepared by a staff team of the IMF for the Executive Board’s
consideration on July 1, 2024, following discussions that ended on May 10, 2024, with
the officials of Iraq on economic developments and policies. Based on information
available at the time of these discussions, the staff report was completed on May 30,
2024.
• An Informational Annex prepared by the IMF staff.
• A Staff Supplement updating information on recent developments.
• A Statement by the Executive Director for Libya.
The IMF’s transparency policy allows for the deletion of market-sensitive information and
premature disclosure of the authorities’ policy intentions in published staff reports and
other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
E-mail: publications@imf.org Web: http://www.imf.org
International Monetary Fund

Washington, D.C.
© 2024 International Monetary Fund
©International Monetary Fund. Not for Redistribution

PR24/267
IMF Executive Board Concludes 2024 Article IV Consultation

with Libya
FOR IMMEDIATE RELEASE
Washington, DC – July 1, 2024: The Executive Board of the International Monetary Fund
(IMF) concluded the Article IV consultation 1 with Libya on Monday, July 1, 2024.
Libya remains a fragile state trapped in political uncertainty, but the episodes of active conflict
have become less frequent. Several shocks have hit the country, but their impact on GDP
growth has been muted. Tropical storm Daniel struck Eastern Libya in September 2023,
leading to devastating floods, catastrophic damage, and a tragic loss of life. The disaster,
however, had only a small impact on economic growth, since Libya’s GDP is mainly based on
energy exports.
In 2023, real GDP is estimated to have expanded by 10 percent, largely owing to a rebound
from the oil production stoppages of 2022. The current account surplus declined, in line with
the fall in oil prices, but reserves remained at a comfortable level. Government revenues also
declined, despite the boost in oil production. Fiscal expenditures, on the other hand, surged,
driven by the expansion in the wage bill and energy subsidies. Reported inflation remained
low, despite the depreciation of the parallel market exchange rate, due to the prevalence of
administered prices and the limited geographic coverage of the available price indices.
In response to the fiscal expansion and the resulting pressure on foreign reserves, the CBL
tightened the restrictions on the issuance of letters of credit and lowered the limits on
individuals’ foreign exchange purchases. Furthermore, a temporary 27 percent tax was
imposed on all foreign exchange purchases.
The outlook continues to be dominated by the dynamics of hydrocarbon production. The

baseline projection is for declining fiscal and external balances over the coming years, in line
with a projected decline in global oil prices. The CBL is expected to maintain the current stock
of international reserves, and the country will continue to have no public debt as
conventionally understood. However, the balance of risks is tilted to the downside, and
uncertainty remains high due to the continuing political stalemate and possible geopolitical
spillovers.
Executive Board Assessment 2
Executive Directors agreed with the thrust of the staff appraisal. While welcoming the
generally positive outlook, they stressed the significant economic and political challenges
arising from Libya’s fragility, prevailing political uncertainty, and hydrocarbon sector
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial information, and discusses with officials the country's economic developments
and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:
http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

2
dependence. Noting that risks are tilted to the downside, Directors emphasized the need to
strengthen fiscal and monetary policy coordination and implement reforms to promote
stronger, more inclusive private sector-led growth. They agreed on the importance of
implementing critical capacity development (CD) through improved coordination with
international partners.
Directors underscored the need to strengthen the fiscal framework and address the procyclical
spending bias to support macroeconomic resilience and improve resource wealth
management. They recommended efforts to increase fiscal transparency, improve tax
administration and compliance, strengthen budget preparation, and enhance the public
financial management framework. Directors emphasized the need to strengthen the
management of state-owned enterprises to reduce fiscal risk.
Directors underscored the need for a durable political settlement to underpin continued
progress on the reunification of the central bank. They highlighted the need to maintain the
integrity of the payments system and implement regulatory and governance reforms in the
banking sector, including to strengthen the AML/CFT framework. Directors recognized that
enhancing macroeconomic policy credibility through stronger policy coordination would help to
reduce the gap between official and parallel market exchange rates. They also noted that
addressing underlying exchange rate pressures would require improved fiscal expenditure
controls and that proper fiscal budgeting would help to avoid procyclical spending and reduce
the risk of a potential loss of reserves.
Directors noted the recent progress on governance indicators and highlighted the need for
substantial further progress. In this regard, Directors welcomed the planned comprehensive
review of governance, anticorruption, and the rule of law, and looked forward to an update in
the next Article IV consultation. Noting that data gaps continue to hamper the ability to conduct
analysis and provide policy advice, Directors underscored the need to enhance data provision
and statistical capacity, supported by Fund CD. The establishment of a coordinating body to
facilitate CD provision and implementation would help to avoid duplication and support better
information-sharing across institutions.

3
Libya: Selected Economic and Financial Indicators, 2021–29
Est. Proj.
2021 2022 2023 2024 2025 2026 2027 2028 2029
(Annual percentage change, unless otherwise indicated)
National income and prices
Real GDP (at market price) 28.3 -8.3 10.2 7.8 6.9 4.2 2.0 2.1 2.3
Nonhydrocarbon 5.9 7.9 -0.6 3.8 5.6 5.3 5.6 5.8 6.0
Hydrocarbon 45.0 -17.0 17.8 10.2 7.7 3.6 0.0 0.0 0.0
Nominal GDP in billions of Libyan dinars 1/ 159.0 208.2 212.0 221.9 232.3 240.3 244.5 250.6 258.6
Nominal GDP in billions of U.S. dollars 1/ 35.2 43.3 44.0 46.0 48.3 50.2 51.3 52.8 54.4
Per capita GDP in thousands of U.S. dollars 5.2 6.4 6.4 6.7 6.9 7.1 7.2 7.3 7.5
GDP deflator 90.4 42.7 -11.4 1.4 -2.1 -0.7 -0.7 -0.3 0.9
CPI inflation
Period average 2.9 4.5 2.4 2.6 2.6 2.6 2.6 2.6 2.6
End of period 3.7 4.1 2.6 2.6 2.6 2.6 2.6 2.6 2.6
(In percent of GDP)
Central government finances
Revenues 79.5 85.8 73.5 64.6 63.3 60.8 57.3 53.7 50.3
Of which: Hydrocarbon 78.1 83.9 71.5 62.9 61.6 59.0 55.5 51.8 48.3
Expenditure and net lending 64.7 62.2 65.3 63.1 62.1 60.3 57.2 53.7 50.3
Of which: Capital expenditures 10.9 8.4 8.7 5.4 5.7 5.8 4.7 3.7 3.2
Overall balance 14.8 23.6 8.2 1.5 1.3 0.5 0.1 0.0 0.0
Overall balance (in billions of U.S. dollars) 5.2 10.2 3.6 0.7 0.6 0.3 0.0 0.0 0.0
Nonhydrocarbon balance -63.3 -60.3 -63.3 -61.4 -60.4 -58.5 -55.4 -51.8 -48.3
(Annual percentage change unless otherwise indicated)
Money and credit
Base Money 2.8 -16.9 47.9 24.1 8.3 9.0 9.3 10.0 10.3
Currency in circulation -20.0 -1.4 37.6 10.3 4.7 2.2 1.5 5.0 5.0
Money and quasi-money -20.3 12.0 28.3 3.5 4.0 4.5 4.5 5.0 5.0
Net credit to the government (Libyan Dinar, billion) -94.1 -114.9 -110.9 -114.8 -117.8 -119.0 -118.6 -118.4 -118.4
Credit to the economy (% of GDP) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
(In billions of U.S. dollars; unless otherwise indicated)
Balance of payments
Exports 32.3 37.5 31.4 31.6 32.1 31.8 30.6 29.7 28.8
Of which: Hydrocarbon 31.0 36.2 29.0 29.5 30.0 29.7 28.4 27.3 26.2
Imports 17.0 17.2 17.6 19.1 19.5 19.3 18.1 17.4 17.2
Current account balance 5.7 12.4 6.4 6.8 7.0 6.3 6.2 6.2 5.7
(As percent of GDP) 16.1 28.6 14.5 14.9 14.5 12.5 12.2 11.7 10.5
Capital Account (including E&O) -7.0 -7.2 -2.8 -6.1 -6.4 -6.0 -6.2 -6.2 -5.7
Overall balance 1.1 4.7 3.6 0.7 0.6 0.3 0.0 0.0 0.0
Reserves
Gross official reserves 69.4 74.1 78.3 79.0 79.5 79.8 79.8 79.8 79.8
In months of next year's imports 32.2 33.6 34.6 34.0 33.9 34.5 36.9 38.5 39.0
Gross official reserves in percentage of Broad Money 317.0 318.2 261.3 254.3 245.0 234.6 223.5 212.4 202.2
Total foreign assets 79.7 84.2 88.5 89.3 89.9 90.2 90.2 90.2 90.2
Exchange rate
Official exchange rate (LD/US$, period average) 4.5 4.8 4.8 … … … … … …
Parallel market exchange rate (LD/US$, period average) 5.1 5.1 5.3 … … … … … …
Parallel market exchange rate (LD/US$, end of period) 5.0 5.1 6.1 … … … … … …
Crude oil production (millions of barrels per day - mbd) 1.2 1.0 1.2 1.3 1.4 1.5 1.5 1.5 1.5
Of which: Exports 1.0 0.8 1.0 1.1 1.1 1.2 1.2 1.2 1.2
Crude oil price (US$/bbl, WEO adjusted for Libya) 64.4 89.6 75.0 72.3 68.6 65.9 63.3 60.8 58.4
Sources: Libyan authorities; and IMF staff estimates and projections.
1/ National accounts data have been revised to reflect recent updates from the authorities. Nominal GDP data are at market prices.
2/ Assumes the CBL transfers LD 15.8 billion (27.4 percent of GDP) in FX surtax revenues in 2019 (out of the LD 20-25 billion it expects to
collect) to the Ministry of Finance.

LIBYA
STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION
May 30, 2024
KEY ISSUES
Context. Libya remains a fragile state trapped in political uncertainty. Episodes of
active conflict have become less frequent, but the country remains de facto divided
between the West and the East and fragmented among various militias with
competing objectives. The political economy constraints and inadequate capacity
hinder the authorities’ ability to implement Fund policy advice.
Recommendations. Libya needs to manage public expenditure consistent with its

macroeconomic constraints, and requires proper budgeting to avoid procyclical
spending, and improve coordination between fiscal and monetary policies.
Completing the central bank reunification remains key to maintaining financial
stability, along with reforms on strengthening monetary policy and updates to the
banking supervision framework. Building capacity, including to address the severe
data gaps, and strengthening institutions would facilitate macroeconomic policy
design and implementation. In the medium term, the key objective remains the
diversification away from hydrocarbons while promoting stronger and more inclusive
private sector growth.
Past advice. The authorities and staff have been in broad agreement on the
macroeconomic policy objectives, including the need for proper budgeting and
strengthening of public financial management, and the necessity of diversifying away
from hydrocarbons in the medium term. The CBL has been proactive in strengthening
the prudential framework, including issuing guidance for banks to increase capital,
reinforcing the Financial Information Unit (FIU), and promoting financial inclusion
through enhancements in electronic payments. Owing to persistent fragilities, the
pace of reform has not kept up with the authorities' plans and staff
recommendations.

LIBYA
Approved By Discussions took place in Tunis, Tunisia during May 1–10, 2024. The
Subir Lall (MCD) and mission comprised Messrs. Gershenson (head) and Apostolou, and
Boileau Loko (SPR) Mmes. ElShazly and Rupavatharam (all MCD). Mr. Ghawi (MCD)
prepared the first draft of the Country Engagement Strategy.
Mr. Sassanpour (OED) participated in the meetings. Mmes. Korman
and Cerna Rubinstein (both MCD) supported the preparation of this
report. The mission met with Central Bank Governor El Kaber,
Deputy Governor Al-Barasi, Minister of Labor and Rehabilitation Ali
Alabed Abuazom, Head of the Audit Bureau Khaled Shakshak,
representatives from the National Oil Corporation, the banking
sector, and other government and central bank officials.
CONTEXT_________________________________________________________________________________________ 4
RECENT MACROECONOMIC DEVELOPMENTS _________________________________________________ 4
OUTLOOK AND RISKS ___________________________________________________________________________ 6
POLICY DISCUSSIONS ___________________________________________________________________________ 6

A. Improving Policy Coordination Through Proper Budgeting __________________________________ 7
B. Completing Central Bank Reunification and Maintaining Financial Stability__________________ 7
C. Strengthening Institutions and Building Capacity ____________________________________________ 9
D. Policies for Diversifying Away from Hydrocarbon and Private Sector Development_________ 10
AUTHORITIES’ VIEWS _________________________________________________________________________ 11
STAFF APPRAISAL ____________________________________________________________________________ 12
BOXES
1. Germany: Unification of the Central Bank in 1990 ______________________________________________ 8
2. Taking Stock of Libya’s Governance Challenges _______________________________________________ 10
FIGURES
1. Real Sector ____________________________________________________________________________________ 15
2. Macroeconomic Developments _______________________________________________________________ 16
TABLES
1. Selected Economic Indicators, 2021–2030 _____________________________________________________ 17
2. Fiscal Sector, 2021–2029 ______________________________________________________________________ 18
2 INTERNATIONAL MONETARY FUND

LIBYA
3. Monetary Sector, 2018–2023 __________________________________________________________________ 19

4. External Sector, 2021–2029 ____________________________________________________________________ 20
5. Financial Soundness Indicators, 2018–2023 ___________________________________________________ 21
ANNEXES
I. Risk Assessment Matrix ________________________________________________________________________ 22
II. External Sector Assessment ___________________________________________________________________ 23
III. Debt Sustainability Analysis ___________________________________________________________________ 25
IV. Country Engagement Strategy________________________________________________________________ 26
V. Data Issues ____________________________________________________________________________________ 30
INTERNATIONAL MONETARY FUND 3

LIBYA
CONTEXT
1. Libya remains a fragile state trapped in political uncertainty. In 2021, the rival
factions agreed to support the transition Government of National Unity (GNU), but the
envisaged elections are yet to take place. While the GNU has maintained control of Tripoli, and
the episodes of active conflict have become less frequent, the country remains de facto divided
between the West and the East and fragmented among various militias with competing
objectives.
2. The reunification of the central bank has advanced. In 2023, the Central Bank of
Libya (CBL) agreed to accept the past obligations of its Eastern branch. Accordingly, some
US$9 billion in commercial banks’ balances at the Eastern branch has already been
consolidated. The reunification efforts have also led to improved coordination in the areas of
monetary policy, banking system liquidity and supervision. As long as the agreement holds,
monetary policy is de facto coordinated across the country, even though the payment systems
remain separate.
RECENT MACROECONOMIC DEVELOPMENTS

3. Several shocks have hit Libya, but their impact on GDP growth has been muted.
Tropical storm Daniel struck Eastern Libya in September 2023, leading to devastating floods,
catastrophic damage, and tragic loss of life. The disaster, however, had only a small impact on
economic growth, since Libya’s GDP is mainly based on energy exports. 1 Similarly, the conflict
in Gaza and the Red Sea shipping disruptions did not affect Libya’s economy meaningfully.
In 2023, real GDP is estimated to have expanded by 10 percent, largely owing to a rebound
from the oil production stoppages of 2022.
4. The year 2023 saw a fiscal expansion. Owing to a 30-percent fall in hydrocarbon
prices, government revenues declined, Text Table 1. Fiscal Revenues and Expenditures
despite the concurrent 20-percent boost to
2022 2023 percent change
oil production. Fiscal expenditures Revenues 178,561 155,911 -13%
nevertheless surged, driven by an almost Expenditures 129,448 138,500 7%
30 percent increase in the wage bill and Salaries 47,100 60,000 27%
Subsidies 55,848 51,000 -9%
higher-than-expected energy subsidies (the
Development, Goods and Services 26,500 27,500 4%
latter despite the lower oil prices). Reflecting Balance 49,113 17,411 -65%
this expansion, public debt increased, and Balance as a % of GDP 24% 8%
the money supply has grown at its fastest Sources: Central Bank of Libya; IMF Staff Calculations.
pace since the fall of the Ghaddafi regime.
1World Bank estimates the losses and damages from the disaster at US$1.7 billion (3.6 percent of GDP). See
World Bank, 2023. Libya Storm and Flooding 2023: Rapid Damage and Needs Assessment. Washington, DC.

LIBYA
5. The authorities have been trying

Exchange Rates
to reduce the use of foreign exchange.
(Monthly average)
In February 2024, responding to pressure
on foreign reserves, the CBL tightened the
restrictions on the issuance of letters of 7.5
credit and lowered the limits on 7 Parallel Official
individuals’ foreign exchange purchases, 6.5
resulting in the widening gap between the 6

parallel and the official exchange rates. In
5.5
early 2024, the authorities imposed a
temporary 27 percent tax on all foreign
5
exchange purchases, while announcing 4.5
the relaxation of some of the previously-

Last obs.: April. 2024
4
Jan-21 Jun-21 Nov-21 Apr-22 Sep-22 Feb-23 Jul-23 Dec-23
enacted restrictions on imports of non-
essential goods and services. The tax is to
Sources: Central Bank of Libya; Libya Observer.
be applied until end-2024, although the
rate could be adjusted earlier if deemed necessary. 2
Food Inflation
6. Reported inflation stayed low (Percent, year on year)
despite the depreciation of the parallel
exchange rate. With prices of most goods 48
Food component of CPI basket
and services either subsidized or

40
International Food Prices in Libyan Dinars 1/
32
administered, reported inflation tends not 24
to track exchange rate movements, even 16
though imports are estimated to 8
constitute around one half of the 0
consumption basket. Moreover, the -8
reported CPI has limited product and -16
geographic coverage. The authorities are

-24
Jan-21 Jun-21 Nov-21 Apr-22 Sep-22 Feb-23 Jul-23 Dec-23
working on expanding coverage and

updating the CPI basket with the new Sources: Central Bank of Libya; Food and Agriculture
index which is expected to be available in Organization (FAO).
1/ Adjusted for the parallel market exchange rate.
2025.
2Staff is currently engaging with the authorities to assess Libya’s exchange system to determine if these
measures are inconsistent with Article VIII obligations.

LIBYA
Gross Official Reserves

(Billions of US Dollars)
7. In 2023, the current account surplus
is estimated to have declined in line with the
140
120
fall in oil prices. 3 Libya’s external position was 100
broadly in line with fundamentals and desirable 80
policy settings (see Annex II) and the CBL has 60
maintained reserves at a comfortably high level,

40
20
at around three years of imports. 0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023*
OUTLOOK AND RISKS Sources: Central Bank of Libya; IMF Staff Estimates.
* 34.4 months of imports
8. The outlook is dominated by the dynamics of hydrocarbon production, which is

projected to reach 1.5 million barrels per day by 2026. GDP is estimated to grow by close to
8 percent in 2024 and continue to expand at lower rates in the outer years. The baseline
projection is for declining fiscal and external balances over the coming years in line with a
projected decline in global oil prices. Consequently, the CBL is expected to maintain the
current stock of international reserves and the country will continue to have no public debt in
the standard sense (see Annex III).
9. The balance of risks is tilted to the downside and uncertainty remains high due to
the continuing political stalemate and possible geopolitical spillovers (Annex I). Risks
identified during the preceding Article IV Consultation have partially materialized, notably
those related to the absence of an approved budget (see IMF Country Report 23/201). The key
global risk is lower oil prices due to lower-than-expected growth worldwide, but higher global
food prices remain a significant source of risk for Libya and could lead to higher inflation, add
to the fiscal burden through higher subsidies, and lead to social discontent and renewed
migration pressures. In the medium term, failure to diversify away from hydrocarbons could
lead to substantially lower fiscal revenues and undermine the country’s prospects. Libya also
faces the risk that the transition to clean energy technology happens faster than anticipated,
posing a risk of disorderly adjustment given the heavy dependence on hydrocarbons.
POLICY DISCUSSIONS
In the short term, proper budgeting would help (i) mitigate the procyclical bias in spending and
(ii) improve coordination between fiscal and monetary policies. In the medium term, the key
policy objective remains the diversification away from hydrocarbons while promoting stronger
and more inclusive private sector growth. Policy discussions focused on: (i) fiscal expenditures;
(ii) reunification of the central bank; (iii) policy framework for the financial sector; and
(iv) governance and capacity building. A stable political and security environment and the
3The authorities do not have the ability to accurately measure imports in the Eastern part of the country.
Annex V discussed Libya’s data shortcomings in the external sector.

LIBYA
institutional development, including with the support from the Fund and other partners, are
necessary for the successful implementation of reforms.
A. Improving Policy Coordination Through Proper Budgeting
10. Avoiding the procyclical spending bias and strengthening Libya’s fiscal
framework would enhance macroeconomic resilience and reduce volatility in activity and
output. Proper budgeting—based on macroeconomic forecasts, fiscal policy objectives and
spending priorities—would assist in delinking spending from revenue volatility and improve
the management of Libya’s resource wealth. 4 In this regard, improving costing tools and
developing a fiscal framework for resource management would be an important first step. This
could be followed in the medium term by payroll analysis, harmonization of public investment
and recurrent budget processes, and production of more complete budget-related reports.
Reducing distortions due to high public sector wages and subsidies would improve incentives
and resource allocation, fostering capital formation and employment opportunities outside the
public sector. Spending should be reprioritized to enhance growth and efficiency and support
intergenerational equity, while tax policy should aim to diversify sources of revenue away from
oil.
11. Identifying the budgetary impact of state-owned enterprises (SOEs) is needed for
understanding fiscal risks. Given Libya’s complex SOE ownership, streamlining ownership
structures and tighter control, especially of state-owned public banks, are necessary for
understanding risks of higher-than-anticipated transfers to SOEs in the form of subsidies,
loans, equity, or lower government revenue. A stock-taking of existing public sector bank
accounts and the development of a roadmap toward a Treasury Single Account would be a
useful first step. Over the medium term, the authorities should consider a gradual and selective
process of privatization that is conducive to private sector development and diversification
away from hydrocarbons.
B. Completing Central Bank Reunification and Maintaining Financial

Stability
12. Full reunification of the central bank remains a key objective, and it requires
integration of the payment system and unification of the accounting procedures. Limiting
monetary financing by the CBL’s Eastern branch will alleviate pressure on the exchange rate
and on banking sector liquidity and will facilitate policy coordination. Implementing the CBL’s
regulatory and governance reforms in the banking sector will strengthen the banks and help to
maintain financial stability.
4 The slow response to the floods in the East is an example of the failure to mobilize fiscal resources promptly
and of the lack of policy coordination among key economic institutions.

LIBYA
13. The absence of a durable political settlement remains an important obstacle to

reunification. International experience suggests that political reconciliation is necessary for a
successful reunification, and that the CBL, as a key economic institution, has an important role
to play in facilitating the transition from fragmentation in Libya (see Box 1).
14. The authorities should address the underlying pressures on the exchange rate.
The central bank should preserve the efficient functioning of the foreign exchange market,
since the exchange rate is the key macroeconomic anchor, given the lack of other policy
instruments. Measures to influence the demand for foreign exchange should be carefully
assessed and weighed against the potential impact on the parallel market, inflation and
reserves. 5 In the absence of conventional monetary policy tools, controlling fiscal expenditure
would be the preferred policy response consistent with Libya’s macroeconomic policy
framework. Furthermore, the central bank should maintain the integrity of the means of
payment, and the recent steps to withdraw the compromised banknotes from circulation are
welcome but the authorities should make sure that alternative modes of payment are available
and that those unbanked are not penalized.
Box 1. Germany: Unification of the Central Bank in 1990

There is limited international experience with central bank reunification, but the most
prominent case is that of Germany. During the Cold War, Germany was divided into two political
entities, West Germany and East Germany, each with its own central bank and currency (the
Deutsche Mark and the Eastern Mark, respectively). The West German Bundesbank was a
conventional central bank with independence in setting monetary and credit policies (R. Effros,
Current Legal Issues Affecting Central Banks, Volume III, 1994). The East German Staatsbank—not an
independent institution—was responsible for the implementation of monetary and credit policies in
addition to having commercial bank functions. The Staatsbank issued banknotes and coins, set the
official exchange rate between foreign currencies and the Eastern Mark, and provided banking
services to the state-owned enterprises (IMF Occasional Paper 90/75).
The two central banks were merged as part of the national reunification process. The
Bundesbank was represented in the commission—which included delegates from both West and
East—that established the modalities of German reunification (Bundesbank, German monetary union:
historical background, 2015).1/ The treaty reunifying Germany created a political, economic, and
currency union between the two German states. The Deutsche Mark became the sole legal tender,
and the Bundesbank was made responsible for monetary and currency policy within the newly unified
country.
____________
1/ Among the technical issues to be resolved was the conversion rate between the Eastern Mark and the Deutsch Mark. The
conversion rate was important for the assets, liabilities, and capital of the banks in the East, and for setting the starting wages
in the East relative to those in the West.
15. Promoting financial stability and strengthening monetary policy requires a

comprehensive reform of the banking sector. Staff outlined a roadmap for such a reform in
5 The Selected Issues Paper quantifies the exchange market pressures on the Libyan dinar.

LIBYA
the course of the 2023 Article IV Consultation, with suggestions in various areas: structural
(central bank reunification, banks’ disclosure requirements); banking law (establishment of a
financial stability committee; development of Islamic finance); governance (fit and proper
requirements; separation between CBL’s ownership and supervisory functions); improving the
anti-money laundering and combating financing terrorism (AML/CFT) framework and
supervision (address AML/CFT control failures and poor reporting of suspicious activities); and
others (see IMF Country Report No. 23/202). The CBL has been proactive in strengthening the
prudential framework, including issuing guidance for banks to increase capital, reinforcing the
Financial Information Unit (FIU), and promoting financial inclusion through enhancements in
electronic payments. 6 Further work is needed to ensure compliance and to strengthen the
banking sector.
C. Strengthening Institutions and Building Capacity
16. Governance reforms throughout the public sector are necessary (Box 2). Despite
recent progress on some governance indicators, corruption is perceived to be an important
concern in Libya, and further reforms for improving governance, the rule of law, anticorruption
institutions and the legal framework would be essential. Enhancing the anticorruption
framework, devising an efficient national anti-corruption strategy and their effective
implementation is also needed. In compliance with the 2018 Policy for Enhanced Engagement
on Governance, the 2025 Article IV consultation is expected to undertake a comprehensive
review of governance, anticorruption, and the rule of law.
17. The IMF will continue to provide capacity development assistance but better
coordination on the authorities’ part is needed. Significant data gaps continue to affect
staff’s ability to conduct analysis and provide policy advice. Capacity development (CD) is
needed for compiling national accounts and PFM reforms, including strengthening macro-
fiscal and budget preparation functions and improving cash management controls and
oversight, need to be prioritized and sequenced. CD for statistics should prioritize national
accounts and the external sector due to significant gaps in these areas (see Annex V). Given
that capacity development is being delivered by multiple providers (the IFIs, including the
Fund, and other organizations), there is a need for the authorities to set up a coordinating
body to facilitate CD provision and implementation, to avoid duplication, and to support
better information-sharing across institutions.
6
The law that prohibits the charging of interest by the banks has technically been rescinded in December 2023
by the House of Representatives.

LIBYA
Box 2. Taking Stock of Libya’s Governance Challenges

Governance indicators deteriorated following the
2011 Revolution and remain below the MENA
average. In 2023, Transparency International ranked
Libya below the MENA average in terms of corruption
perception, signaling significant corruption
vulnerabilities.1/ The World Bank ranks Libya below
the MENA averages in rule of law, regulatory quality,
control of corruptions, and voice and accountability
(D. Kaufmann and A. Kraay, Worldwide Governance
Indicators, 2023 Update).
More recently, while governance has further
deteriorated in some dimensions, Libya has made
small but encouraging progress in others, Libya: World Governance Indicators
namely control of corruption and regulatory (Percentile rank)
quality. The authorities have also made progress Political Stability Absence of
Violence/Terrorism
toward (i) transparency in data dissemination and
(ii) adopting international best practices in data Control of Corruption
reporting. Libya has not made progress to launch
the National Summary Data Page, and the IMF is Rule of Law
assisting the authorities by providing capacity

development in several related areas, including Government Effectiveness
public financial management, tax, and customs. 2011 2016 2022

Regulatory Quality
Confronting corruption effectively and
strengthening the rule of law will require a 0 2 4 6 8 10 12 14 16
range of actions to prevent corruption more Sources: World Bank.

effectively and strengthen governance. Those
actions should include steps to strengthen the anticorruption legal framework so that it is aligned with
Libya’s obligations under the United Nations Convention Against Corruption, along with work on creating
effective systems for preventing conflict of interests and asset declarations. Libya would also benefit from
adopting and implementing an updated National Anticorruption Strategy, with adequate monitoring
mechanisms. These actions will need to be combined with complementary acts to address governance
weaknesses.
____________
1/ The accuracy of the index can be biased by experts’ views (instead of facts on corruption). Non-IMF indicators provide qualitative
information about corruption. They do not represent the IMF’s assessment of the level of corruption in Libya.
2/ Lower ranking denotes deterioration.
D. Policies for Diversifying Away from Hydrocarbon and Private Sector

Development
18. The longer-term economic strategy should aim to diversify away from
hydrocarbons and to foster stronger and more inclusive private sector-led growth.
Structural reform efforts should focus on strengthening institutions and the rule of law and
developing a clear economic vision for the country. A plan is needed to scale up development
spending to alleviate growth bottlenecks and reduce fiscal costs associated with high spending

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on public sector wages and subsidies. 7 The authorities should capitalize on Libya’s comparative
advantages (location, landmass, natural resources, and access to energy and labor) to promote
development of labor-intensive non-oil economic activity (see Annex IV).
AUTHORITIES’ VIEWS
19. The authorities were broadly in agreement with the staff’s views. They agreed with
the macroeconomic policy objectives for Libya outlined in the staff report, including the need
for a unified budget, curbing public expenditure, reforming energy subsidies as well as
diversifying away from hydrocarbons in the medium term.
20. The authorities highlighted the continued progress on the reunification of the
central bank. Authorities stated that significant progress has been accomplished over the past
year in the reunification process across most departments and noted that achieving a de-facto
full reunification requires a comprehensive political reconciliation at the national level.
21. They expressed their concern about the increase in public spending. The recent
untargeted expansion in fiscal spending, especially on wages and subsidies, is putting pressure
on the exchange rate and depleting the country’s reserves. The authorities agreed that a
unified approved budget will help identify spending priorities and improve resource allocation,
thus avoiding ad hoc spending and thereby fostering sustainability.
22. The exchange rate is currently the nominal anchor for the Libyan economy. The
CBL underscored the critical role of the exchange rate in the stability of the economy and
stated that the decision to impose a tax on foreign exchange purchases is intended as a
temporary measure to safeguard the country’s reserves. The authorities maintained that while
the tax may cause distortions in the exchange system, it was the only way to curb the ongoing
pressure on foreign reserves and will be removed as soon as spending is restrained.
23. Reforming energy subsidies remains a priority in the medium-term. The

authorities conceded that the current untargeted fuel subsidies disproportionally benefit select
groups and drain the country’s resources and deplete the wealth of future generations.
However, they realize that the political economy constraints currently hinder implementation
of such a reform.
24. In the medium term, diversifying away from hydrocarbons and developing the
private sector will be key. The volatility in oil prices and the transition to green energy is
7 Almost 90 percent of the formally employed population work for the public sector, with estimates of the
unemployment rate ranging from 15 and 19 percent. These numbers exclude the reportedly large pool of
informal migrant labor. Energy subsidies account for about one quarter of government spending.

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especially critical to Libya and highlights the need to diversify the economy and utilize
available resources to develop new industries through the private sector.
25. The central bank reiterated its commitment to enhancing financial sector
regulation and supervision. The CBL has already taken steps to strengthen banking
supervision, including directing banks to raise their capital, developing the FIU and the
AML/CFT framework, and remains committed to continued progress in this regard.
Furthermore, the CBL’s decision to withdraw the 50-dinar banknotes from circulation was
necessary to preserve the credibility of the currency and build confidence in the banking
system.
26. The authorities recognize that governance needs to improve. They agreed that
more reforms need to be undertaken to enhance governance, combat corruption, and increase
transparency and accountability. They look forward to the planned comprehensive review of
governance discussions next year during the 2025 Article IV consultations.
27. Improving data availability and quality is crucial. The authorities underlined the
progress already achieved in data quality and availability for external statistics and monetary
and financial statistics, and for fiscal outturns. Furthermore, the authorities are working on
updating the current CPI basket and expanding its coverage as well as providing updated
labor statistics. The authorities agree, however, that more work needs to be done to produce
and report key macroeconomic data in a timely and consistent manner and will continue to
seek the IMF’s technical assistance in this regard.
28. The authorities expressed the need for further capacity development in several
areas. They are grateful for the technical assistance provided by the IMF and agreed to better
coordinate to make optimal use of the support offered from all international partners. They
expressed their need for assistance on budget preparation, monetary policy, national accounts,
labor market statistics, CPI rebasing, developing the macro-fiscal unit and PFM functions.
STAFF APPRAISAL
29. The dynamics of hydrocarbon production and exports is going to determine
Libya’s available resource envelope in the short and medium term. The relatively benign
baseline projection—of declining fiscal and external balances—is in line with a projected
decline in global oil prices. Lack of fiscal prudence is an important downside risk, one that has
partially materialized in the last year. Other notable risks are the volatility of world oil prices
(and hence fiscal revenues) and the faster-than-expected worldwide transition to clean energy
technology. In the longer term, the authorities need to focus on creating a solid foundation for
non-hydrocarbon private sector-led growth by way of strengthening institutions and the rule
of law and by investing in the country’s productive capacity.

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30. A durable political settlement is needed to complete the reunification of the

central bank. The authorities are to be commended for the steps already taken, including the
improved coordination in the areas of monetary policy, banking system liquidity and
supervision. Full reunification will, to a large extent, depend on the pace of political
reconciliation and require integrating the payment system and unifying the central bank’s
accounting procedures.
31. Better coordination between fiscal and monetary policies would help to enhance
macroeconomic policy credibility and decrease the gap between official and parallel
market exchange rates.
• Addressing the underlying pressures on the exchange rate by controlling fiscal expenditure
would be the preferred response consistent with Libya’s current macroeconomic policy
framework. An agreed-upon budget is vital to manage Libya’s resources, and proper
budgeting would help to avoid procyclical spending and reduce risks from a potential loss
of reserves.
• Preserving adequate foreign exchange reserves and the efficient functioning of the foreign
exchange market is key. Measures to influence the use of foreign exchange should be
carefully assessed and weighed against the potential impact on the parallel market,
inflation, and reserves.
32. Further steps to maintain the integrity of the means of payment and reform the
banking sector are needed. Improving NPL reporting, monitoring the capitalization of banks,
and divesting from commercial banks would enhance financial intermediation. The CBL has
been proactively enhancing the prudential framework and has been guiding banks to increase
their capital ratio, and has strengthened the Financial Information Unit, and taken steps to
promote financial inclusion. Further work is needed to ensure compliance and to strengthen
the banking sector, including a national assessment of money laundering and terrorist
financing risks to identify priorities for AML/CFT mitigation measures. There is a pressing need
to reduce banks’ operational risk, conduct a national assessment of ML/TF risks and strengthen
AML/CFT supervision, reform legal and administrative procedures and further develop Islamic
finance products. The central bank should maintain the integrity of the means of payment, and
the steps the authorities’ withdrawal of all 50-dinar notes from circulation, given the significant
number of counterfeit bills, are welcome, but the authorities need to make sure that the
alternative modes of payment are available.
33. Strengthening of the fiscal framework is needed. Reforms are needed to build
institutional capacity by increasing transparency and improving tax administration and
compliance. Stock-taking of existing public sector bank accounts and the establishment of a
Treasury Single Account are required, and a gradual and selective process of privatization to
promote private sector development and aid in the diversification of the economy away from
hydrocarbons. Strengthening macro-fiscal and budget preparation functions, and broader PFM

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framework reforms are essential to improve expenditure controls and ensure proper
budgeting.
34. Despite recent progress on some governance indicators, further reforms are
needed. Corruption is perceived to be an important concern and Libya is ranked below the
MENA average in terms of corruption perceptions. Confronting corruption effectively and
strengthening the rule of law will require a range of actions to prevent corruption more
effectively and strengthen governance. Those actions include steps to strengthen the
anticorruption legal framework and align it with Libya's obligations under the United Nations
Convention Against Corruption. Libya would benefit from adopting and implementing an
updated National Anticorruption Strategy, with adequate monitoring mechanisms. In
compliance with the 2018 Policy for Enhanced Engagement on Governance, the 2025 Article IV
consultation is expected to undertake a comprehensive review of governance, anticorruption,
and the rule of law.
35. There is a need to enhance data provision and statistical capacity. Serious data
gaps continue to significantly hamper staff’s ability to conduct analysis and provide policy
advice. Capacity development is needed for compiling national accounts. Economic surveys
have been paused after the revolution and have not restarted which creates data weaknesses
that impede the quality of staff analysis and policy advice. There is a need for the authorities to
set up a coordinating body to facilitate CD provision and implementation and to avoid
duplication, as CD is being delivered by multiple providers (the IFIs, including the Fund, and
other organizations).
36. Staff is currently engaging with the authorities to assess Libya’s exchange system
to determine if any measures the authorities have introduced are inconsistent with their
obligations under Article VIII.
37. Staff recommends that the next Article IV consultation be held on the standard
12-month cycle.

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Figure 1. Libya: Real Sector

Hydrocarbon sector drives economic output.
Contribution to Real GDP Real GDP and Oil Production Growth
(percent) (percent, year on year)
40 40 350
Real GDP growth Oil Production growth (RHS)
30 300
30
250
20 20
200
10 10
150
0 0
100
-10 -10
50
-20 -20
0
Hydrocarbon Sector
-30 Non-Hydrocarbon Sector -30 -50
Real GDP Growth
-40 -100
-40
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Sources: Libyan Authorities. Sources: Libyan Authorities, OPEC.
Measured inflation remains low Labor force participation is high by the regional standards,
but so is unemployment.
Contribution to Inflation
Labor Statistics, 2023
(percent, year on year)
(percent)
6
60
Food
5 Housing, Electricity & Fuel Labor force participation rate Unemployment rate
Other 50
4 Headline CPI
40
3
2 30
1
20
0
10
-1
Last obs.: March. 2024
-2 0
Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Libya Tunisia MENA Egypt Algeria
Sources: Central Bank of Libya. Sources: World Bank (ILO Estimates).

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Figure 2. Libya: Macroeconomic Developments

Current account remains in surplus…. …with oil sales financing imports.
Current Account Composition of the Trade Balance
(billions of US Dollars) (billions of US Dollars)
60 60
Exports Oil exports Other exports Oil Imports Other imports Services (net)
50 50
Imports
40 40
Current account balance
30 30
20 20
10 10
0 0
-10 -10
-20
-20
-30
-30
-40
-40
-50
-50
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Sources: Central Bank of Libya; IMF Staff Estimates. Sources: Central Bank of Libya; IMF Staff Estimates.
Growth in currency in circulation moved in tandem with
…and higher wage expenditure.
the parallel market premium…
Currency in Circulation and Parallel Market Premium Wages and Salaries

(percent, year on year; percent) (Billions of Libyan Dinars)
50
70
40
60
30
50
20
10 40
0 30
-10 20
-20
10
Currency in circulation (growth) Parallel market premium
-30
0
Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24
2020 2021 2022 2023
Sources: Central Bank of Libya; IMF Staff Estimates. Source: Central Bank of Libya.
Defense and education account for two-thirds of total
Wages and subsidies comprise the bulk of expenditures…
employment…
Composition of Expenditure: 2023 Sectoral Employment
(percent of total expenditure) (percent of total employment)
13.4
Wages 7%
9% Defense
Subsidies and Transfers 1% 2.3
Education 44.1
39% 5.4
Capital Expenditure
11%
Health
Extra-Budgetary Capital 8
Expenditure (Oil Investment) Trade
National Defense
Mining
33%
Other
Other
26.8
Sources: Central Bank of Libya; IMF Staff Estimates. Sources: Libyan Bureau of Statistics and Census.

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Table 1. Libya: Selected Economic Indicators, 2021–2030

Est. Proj.
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
(Annual percentage change, unless otherwise indicated)

National income and prices
Real GDP (at market price) 28.3 -8.3 10.2 7.8 6.9 4.2 2.0 2.1 2.3 2.5
Nonhydrocarbon 5.9 7.9 -0.6 3.8 5.6 5.3 5.6 5.8 6.0 6.3
Hydrocarbon 45.0 -17.0 17.8 10.2 7.7 3.6 0.0 0.0 0.0 0.0
Nominal GDP in billions of Libyan dinars 1/ 159.0 208.2 212.0 221.9 232.3 240.3 244.5 250.6 258.6 270.8
Nominal GDP in billions of U.S. dollars 1/ 35.2 43.3 44.0 46.0 48.3 50.2 51.3 52.8 54.4 57.0
Per capita GDP in thousands of U.S. dollars 5.2 6.4 6.4 6.7 6.9 7.1 7.2 7.3 7.5 0.0
GDP deflator 90.4 42.7 -11.4 1.4 -2.1 -0.7 -0.7 -0.3 0.9 3.2
CPI inflation
Period average 2.9 4.5 2.4 2.6 2.6 2.6 2.6 2.6 2.6 2.6
End of period 3.7 4.1 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6
(In percent of GDP)

Central government finances
Revenues 79.5 85.8 73.5 64.6 63.3 60.8 57.3 53.7 50.3 46.4
Of which: Hydrocarbon 78.1 83.9 71.5 62.9 61.6 59.0 55.5 51.8 48.3 44.4
Expenditure and net lending 64.7 62.2 65.3 63.1 62.1 60.3 57.2 53.7 50.3 45.2
Of which: Capital expenditures 10.9 8.4 8.7 5.4 5.7 5.8 4.7 3.7 3.2 2.7
Overall balance 14.8 23.6 8.2 1.5 1.3 0.5 0.1 0.0 0.0 1.2
Overall balance (in billions of U.S. dollars) 5.2 10.2 3.6 0.7 0.6 0.3 0.0 0.0 0.0 0.7
Nonhydrocarbon balance -63.3 -60.3 -63.3 -61.4 -60.4 -58.5 -55.4 -51.8 -48.3 -43.2
(Annual percentage change unless otherwise indicated)

Money and credit
Base Money 2.8 -16.9 47.9 24.1 8.3 9.0 9.3 10.0 10.3 16.7
Currency in circulation -20.0 -1.4 37.6 10.3 4.7 2.2 1.5 5.0 5.0 5.0
Money and quasi-money -20.3 12.0 28.3 3.5 4.0 4.5 4.5 5.0 5.0 5.0
Net credit to the government (Libyan Dinar, billion) -94.1 -114.9 -110.9 -114.8 -117.8 -119.0 -118.6 -118.4 -118.4 -121.7
Credit to the economy (% of GDP) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
(In billions of U.S. dollars; unless otherwise indicated)

Balance of payments
Exports 32.3 37.5 31.4 31.6 32.1 31.8 30.6 29.7 28.8 27.7
Of which : Hydrocarbon 31.0 36.2 29.0 29.5 30.0 29.7 28.4 27.3 26.2 25.2
Imports 17.0 17.2 17.6 19.1 19.5 19.3 18.1 17.4 17.2 16.7
Current account balance 5.7 12.4 6.4 6.8 7.0 6.3 6.2 6.2 5.7 5.4
(As percent of GDP) 16.1 28.6 14.5 14.9 14.5 12.5 12.2 11.7 10.5 9.5
Capital Account (including E&O) -7.0 -7.2 -2.8 -6.1 -6.4 -6.0 -6.2 -6.2 -5.7 -4.7
Overall balance 1.1 4.7 3.6 0.7 0.6 0.3 0.0 0.0 0.0 0.7
Reserves
Gross official reserves 69.4 74.1 78.3 79.0 79.5 79.8 79.8 79.8 79.8 80.6
In months of next year's imports 32.2 33.6 34.6 34.0 33.9 34.5 36.9 38.5 39.0 40.2
Gross official reserves in percentage of Broad Money 317.0 318.2 261.3 254.3 245.0 234.6 223.5 212.4 202.2 194.3
Total foreign assets 79.7 84.2 88.5 89.3 89.9 90.2 90.2 90.2 90.2 91.0
Exchange rate
Official exchange rate (LD/US$, period average) 4.5 4.8 4.8 … … … … … … …
Parallel market exchange rate (LD/US$, period average) 5.1 5.1 5.3 … … … … … … …
Parallel market exchange rate (LD/US$, end of period) 5.0 5.1 6.1 … … … … … … …
Crude oil production (millions of barrels per day - mbd) 1.2 1.0 1.2 1.3 1.4 1.5 1.5 1.5 1.5 1.5
Of which: Exports 1.0 0.8 1.0 1.1 1.1 1.2 1.2 1.2 1.2 1.2
Crude oil price (US$/bbl, WEO adjusted for Libya) 64.4 89.6 75.0 72.3 68.6 65.9 63.3 60.8 58.4 56.1
Sources: Libyan authorities; and IMF staff estimates and projections.

1/ National accounts data have been revised to reflect recent updates from the authorities. Nominal GDP data are at market
prices.

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Table 2. Libya: Fiscal Sector, 2021–2029
Sources: Ministry of Finance; and Fund staff estimates and projections.

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Table 3. Libya: Monetary Sector, 2018–2023
2018 2019 2020 2021 2022 2023
(In millions of Libyan dinars)
Broad money 111,566 108,889 126,271 100,656 112,714 144,577

Money 108,246 105,569 122,950 97,335 109,393 141,255
Quasi-money 3,320 3,320 3,320 3,320 3,321 3,322
Net claims on government -8,352 -20,389 -1,374 -94,087 -114,914 -110,858
Claims on the rest of the economy 17,405 18,173 18,289 21,138 49,881 52,127
Claims on nonfinancial public enterprise 5,244 6,104 5,931 6,692 9,235 8,178
Claims on the private sector 11,648 11,304 11,633 13,717 22,311 25,890
Net foreign assets 116,256 114,306 101,088 359,934 374,804 394,182

Domestic credit 9,053 -2,216 16,915 -72,949 -65,033 -58,731
Net claims on government -8,352 -20,389 -1,374 -94,087 -114,914 -110,858
(Change in percent)
Broad money -0.8 -2.4 16.0 -20.3 12.0 28.3

Money -0.8 -2.5 16.5 -20.8 12.4 29.1
Quasi-money 0.0 0.0 0.0 0.0 0.0 0.0
Net claims on government 305.8 -144.1 93.3 -6746.9 -22.1 3.5
Claims on the economy -4.7 4.4 0.6 15.6 136.0 4.5
Claims on nonfinancial public enterprises -6.0 16.4 -2.8 12.8 38.0 -11.4
Claims on the private sector -4.2 -2.9 2.9 17.9 62.6 16.0
(Percent change over beginning broad money stock)
Net foreign assets 9.4 -1.7 -12.1 205.0 14.8 17.2

Domestic credit -11.8 -10.1 17.6 -71.2 7.9 5.6
Net claims on government -11.0 -10.8 17.5 -73.4 -20.7 3.6
Claims on the economy -0.8 0.7 0.1 2.3 28.6 2.0
Claims on nonfinancial public enterprises -0.3 0.8 -0.2 0.6 2.5 -0.9
Claims on the private sector -0.5 -0.3 0.3 1.7 8.5 3.2
Sources: Central Bank of Libya; and Fund staff estimates and projections.

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Table 4. Libya: External Sector, 2021–2029
Est. Proj.
2021 2022 2023 2024 2025 2026 2027 2028 2029
(In millions of U.S. dollars)

Current account 5,683 12,401 6,390 6,835 7,020 6,295 6,237 6,178 5,712
Goods and services 6,983 12,787 5,752 4,051 4,264 4,282 4,792 4,877 4,324
Goods 15,361 20,343 13,785 12,441 12,579 12,510 12,507 12,293 11,646
Exports (f.o.b) 32,343 37,519 31,363 31,567 32,103 31,829 30,624 29,705 28,839
Hydrocarbon 30,975 36,232 29,040 29,502 30,003 29,747 28,355 27,252 26,217
Others 1,367 1,287 2,323 2,065 2,100 2,082 2,268 2,453 2,622
Imports (f.o.b) -16,981 -17,176 -17,579 -19,126 -19,525 -19,320 -18,116 -17,412 -17,193
Services -8,378 -7,556 -8,033 -8,390 -8,315 -8,228 -7,715 -7,416 -7,322
Receipts 83 84 86 94 96 95 89 85 84
Payments -8,461 -7,640 -8,119 -8,484 -8,411 -8,323 -7,804 -7,501 -7,406
Income, of which: -538 270 1,322 3,474 3,466 2,721 2,149 2,001 2,084
Direct investment income -1,419 -1,422 -1,581 -1,669 -1,718 -1,718 -1,718 -1,718 -1,718
Other investment income 747 1,560 2,120 4,314 4,307 3,511 2,884 2,679 2,700
Current transfers -762 -656 -683 -690 -710 -708 -704 -700 -696
Capital and financial account -6,428 -5,113 -2,780 -6,133 -6,410 -6,038 -6,209 -6,162 -5,711
Direct investment (net) 378 -285 458 503 554 609 670 737 811
Portfolio investment (net) -914 -1,106 -1,162 -1,220 -1,281 -1,345 -1,412 -1,483 -1,557
Other investment (net) -5,892 -3,721 -2,075 -5,417 -5,683 -5,302 -5,467 -5,416 -4,965
Errors and omissions 1,855 -2,572 0 0 0 0 0 0 0
Overall balance 1,110 4,716 3,611 701 609 257 28 16 1
Memorandum items
Total foreign assets (in billions of U.S. dollars) 1/ 79.7 84.2 88.5 89.3 89.9 90.2 90.2 90.2 90.2
Gross official reserves (in billions of U.S. dollars) 2/ 69.4 74.1 78.3 79.0 79.5 79.8 79.8 79.8 79.8
in months of next year's imports 33.6 34.6 34.0 33.9 34.5 36.9 38.5 39.0 40.2
Sources: Central Bank of Libya; and Fund staff estimates and projections.
1/ Total foreign assets exclude Libyan Investment Authority (LIA) assets.
2/ Gross official reserves include LIA deposits at the CBL of about USD 20 billion.

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Table 5. Libya: Financial Soundness Indicators, 2018–2023
2018 2019 2020 2021 2022 2023
Core Set:
Regulatory capital to risk-weighted assets 17.8 18.4 19.2 16.6 15.7 15.3
Nonperforming loans net of provisions to capital 5.1 0.8 0 n.a. n.a. n.a.
Nonperforming loans to gross loans 21.00 34.2 34.1 29.6 24.1 22.2
Return on assets 1.00 0.7 0.5 0.9 0.6 0.7
Return on equity 20.9 12.3 9.8 18.5 10.7 12.1
Liquid assets to total assets 74.3 71.9 72.1 68.4 66.7 66.9
Liquid assets to short-term liabilities 108.6 83.7 86.4 91.2 83.2 70.8
Net open position in foreign exchange to capital and reserves 103.4 99.2 51.7 n.a. n.a. n.a.
Encouraged Set:
Capital to assets 4.6 5.5 4.9 4.7 5.2 6.1
Average lending rate 0.0 0.0 0.0 n.a. n.a. n.a.
Average deposits rate 0.0 0.0 0.0 n.a. n.a. n.a.
Spread over 3-month deposit rate 0.0 0.0 0.0 n.a. n.a. n.a.
Foreign-currency-denominated assets to total assets 6.2 5.5 3.1 n.a. n.a. n.a.
Foreign-currency-denominated liabilities to total assets 0.5 0.1 0.2 n.a. n.a. n.a.
Loan provisions to nonperforming loans 90.4 98.6 99.4 89.2 84.1 n.a.
Ratio of banks' lending to banks' capital 254.1 276.8 272.5 309.3 270.2 n.a.
Source: Central Bank of Libya.

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Annex I. Risk Assessment Matrix

Expected Impact if Risk Policy Response and
Risk Likelihood
Materializes Recommendations
Global Risks
Low-Medium Initiate targeted support for the
Higher food prices add to fiscal burden most vulnerable to protect againest
Intensification of regional conflicts. Escalation or spread of through higher indirect subsidies or rising food prices. Accommodate
the conflict in Gaza and Israel, Russia’s war in Ukraine, and/or social discontent if domestic price demand on FX and provide
High pressures are not contained, while domestic liquidity as needed.
other regional conflicts or terrorism disrupt trade, FDI and
higher energy prices would reduce
financial flows, payment systems, and increase refugee flows.
fiscal and external vulnerabilities.
Medium Initiate energy subsidy reform,

Higher food prices add to fiscal burden replacing broad subsidies with
Commodity price volatility. A succession of supply through higher indirect subsidies, targeted support for the most
disruptions and demand fluctuations causes recurrent while lower energy prices would vulnerable. Replace untargetted
commodity price volatility, external and fiscal pressures in High significantly erode fiscal space and grants and allowances with well
weaken the external position. designed social support programs
EMDEs, cross-border spillovers, and social and economic
targetting the most vulnurable
instability.
Avoid procyclicality of fiscal

High
spending by reducing wastful
Sharp global growth slowdown current spending and build fiscal
Abrupt global slowdown. Global and idiosyncratic risk
leading to sustained decline in oil and space to allow for gradual
factors cause a synchronized sharp growth downturn, with gas prices will turn current account adjustment. Replace broad subsidies
recessions in some countries, adverse spillovers through trade Medium and the overall balance surpluses into with targetted social support to the
and financial channels, and market fragmentation triggering deficit and significantly weaken the vulnurable.
sudden stops in EMDEs. fiscal and external poistions.
Accelerate fiscal and structural

Medium
reforms to boost potential growth,
Deepening geoeconomic fragmentation. Broader conflicts, Deepening geoeconomic by incentivizing the
inward-oriented policies, and weakened international fragmentation could diversification of the export base
cooperation result in a less efficient configuration of trade and disrupt trade flows and hamper away from oil and enhancing the
economic diversification competitiveness of the non-oil
FDI, supply disruptions, protectionism, policy uncertainty, High
attempts. Libya could export sector.
technological and payments systems fragmentation, rising nevertheless benefit in the
shipping and input costs, financial instability, a fracturing of short-term if there is, an increase
international monetary system, and lower growth. in hydrocarbon prices
Invest in climate-resilient
High
infrastructure
Libya is vulnerable, recently and agriculture
Extreme climate events. Extreme climate events driven by experiencing deadly floods, Accelerate economic diversification
rising temperatures cause loss of human lives, severe damage to climate shocks. In addition to away from hydrocarbons.
Medium the impact on lives and
to infrastructure, supply disruptions, lower growth, and
livelihoods, these shocks could
financial instability. entail large fiscal costs and add
to inflationary pressures.
High Proceed with wide ranging

Social discontent. High inflation, real income loss, spillovers The fragile status quo could revert into governance and anti-corruption
active conflict and oil blockades to be reforms, build adequate fiscal and
from conflicts (including migration), worsening inequality, and
used again to exert political pressure. FX reserve buffers, adopt a medium-
disputed elections cause social unrest and detrimental populist Medium
This would endanger fiscal term
policies. This exacerbates imbalances, slows growth, and leads fiscal anchor, and
sustainability and exacerbate external
to policy uncertainty and market repricing. imbalances. transparently communicate fiscal
goals to the public.
Domestic Risks
High Initiate reforms to target subsidies
Political instability turns into active conflict. Political and share oil wealth more equitably
Fiscal and external positions
tensions could lead to active conflict or the reuse of oil deterriorate leading to loss of FX across the country.
High
facilities and export terminal blockade to push political reserves and financial sector instability.
demands.
High Phase out broad-based allowances

Higher current expenditure will put the and grants and, if needed, replace
fiscal position on an unsustainble path them with social support measures
Wasteful fiscal spending to gain popular support. In the and errode available fiscal space from that target the vulnerable. Increase
the oil windfall, leaving the country capital expenditure to rebuild
abcense of a political soultion, political rivals could engage in
High vulnurable to future shocks. necessary infrastructure, and initiate
more wastful current expenditure such as grants and
structural reforms that will
allowances to shore up support. strengthen the private sector and
create jobs.

LIBYA
Annex II. External Sector Assessment

Overall Assessment: Libya’s external position in 2023 was broadly in line with the levels implied by
fundamentals and desirable policy settings. Based on results from the EBA-lite current account (CA)
model, the CA gap is estimated at -1 percent. The external position is heavily reliant on hydrocarbon
exports. Foreign exchange reserves are adequate.
Potential Policy Responses: A focus on maintaining the stability of the exchange rate by controlling
fiscal expenditure (in the absence of other monetary policy tools), while fostering economic
diversification and encouraging private sector competition, would help ensure external sustainability
over the medium-term. Diversification would be crucial to minimize risks from fluctuations in the
hydrocarbon sector.
Current Account
Libya: Model Estimates for 2023 (in percent of GDP)

CA model 1/
(in percent of GDP)
CA-Actual 14.5
Cyclical contributions (from model) (-) 1.4
Natural disasters and conflicts (-) 1.0
Adjusted CA 12.1
CA Norm (from model) 2/ 13.1

Adjusted CA Norm 13.1
CA Gap -1.0
o/w Relative policy gap 7.6
Elasticity -0.3
REER Gap (in percent) 3.1

1/ Based on the EBA-lite 3.0 methodology
2/ Cyclically adjusted, including multilateral consistency adjustments.
Background. Libya’s current account is largely dependent on hydrocarbons, with the share of
hydrocarbons in total exports being over 90 percent. The current account surplus is estimated to have
declined from 28.6 percent of GDP in 2022 to 14.5 percent of GDP in 2023. This decline is driven
primarily by the decrease in oil prices. Over the medium-term, a projected increase in hydrocarbon
production to 1.5 million barrels per day will not be sufficient to offset an expected decline in oil
prices.
Assessment. The EBA-lite current account (CA) model estimate for the current account gap
is -1 percent. Using an elasticity of -0.3, the result points to an overvaluation of Libya’s real effective
exchange rate by approximately 3.1 percent. This assessment of the current account balance is
broadly in line with the level implied by fundamentals and desirable policy settings.

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Real Exchange Rate
Background. The dinar is pegged to the SDR. Since January 2021, the official rate has been
SDR 0.1555 per LYD 1.
Assessment. Consistent with the staff CA gap and based on an elasticity of -0.3, staff assesses the
REER to be overvalued by about 3.1 percent. Exchange rate movements have a limited impact on
competitiveness in the short run as oil is the main exported product and there is limited
substitutability between imports and domestically produced products.
Capital and Financial Accounts: Flows and Policy Measures
Background. The capital and financial accounts are primarily driven by other investments,
concentrated in the oil sector in the form of reinvestments by oil companies.
Assessment. Diversification of the economy away from hydrocarbons and development of the private
sector would help to increase and better channel investments. Efforts to improve the business climate
and policy predictability could help attract more investments over the medium term.
FX Intervention and Reserves Level
Background. Libya’s gross official reserves remain very high by any metric, standing at US$78.3 billion
at the end of 2023, more than 200 percent of GDP and covering more than 3 years of imports.
Assuming fiscal spending remains contained, reserves are projected to rise slowly as current account
surpluses gradually decline, reaching more than US$79.8 billion by 2029.
Assessment. Reserves play a dual role of providing buffers for precautionary motives and savings for
future generations. Against the backdrop of heightened political and security risks, reserves are
adequate for these purposes.

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Annex III. Debt Sustainability Analysis

Libya: Base Scenario
(Percent of GDP unless indicated otherwise)
Actual Medium-term projection Extended projection
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Public debt 91.5 83.4 79.9 77.6 76.8 76.0 74.0 73.2 n.a. n.a.
Change in public debt 13.9 -8.1 -3.5 -2.3 -0.8 -0.8 -1.9 -0.9 n.a. n.a.
Contribution of identified flows -1.4 -8.1 -3.5 -2.3 -0.8 -0.8 -1.9 -0.9 n.a. n.a.
Primary deficit -8.7 -5.0 -4.0 -3.6 -2.9 -2.1 -1.8 -0.4 n.a. n.a.
Noninterest revenues 73.5 61.6 60.6 58.4 55.4 52.7 49.6 47.4 n.a. n.a.
Noninterest expenditures 64.8 56.6 56.6 54.8 52.6 50.5 47.8 47.0 n.a. n.a.
Automatic debt dynamics -1.4 -8.1 -3.5 -2.3 -0.8 -0.8 -1.9 -0.9 n.a. n.a.
Real interest rate and relative inflation 5.7 -1.5 1.9 0.9 0.7 0.8 -0.2 0.9 n.a. n.a.
Real interest rate 5.7 -1.5 1.9 0.9 0.7 0.8 -0.2 0.9 n.a. n.a.
Relative inflation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Real growth rate -7.2 -6.6 -5.4 -3.2 -1.5 -1.6 -1.7a. -1.8 n.a. n.a.
Real exchange rate 0.0 … … … … … …… … … …
Other identified flows 8.7 5.0 4.0 3.6 2.9 2.1 1.8 0.4 n.a. n.a.
Contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Other transactions 8.7 5.0 4.0 3.6 2.9 2.1 1.8 0.4 n.a. n.a.
Contribution of residual 15.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Gross financing needs -8.7 -5.0 -4.0 -3.6 -2.9 -2.1 -1.8 -0.4 n.a. n.a.
of which: debt service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Local currency 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Foreign currency 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Memo:
Real GDP growth (percent) 10.2 7.8 6.9 4.2 2.0 2.1 2.3 2.5 n.a. n.a.
Inflation (GDP deflator; percent) -7.5 1.8 -2.4 -1.1 -0.9 -1.0 0.3 -1.3 n.a. n.a.
Nominal GDP growth (percent) 1.9 9.7 4.4 3.0 1.0 1.1 2.6 1.2 n.a. n.a.
Effective interest rate (percent) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a.
Contribution to Change in Public Debt

(Percent of GDP)
30
200
Primary deficit
20 0
150 Projection
100 10 20
Real Interest
0 0 rate and relative
50
inflation
0 -10 -22 -18 Real GDP
growth
-50 -20
Exch. rate
-100 -30 depreciation
-150 -20
-40 Other flows
-200
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 -50
Cumulative
Staff commentary: Under budget law, the central bank can provide advances to the government up to one fifth of estimated
revenues in the budget, and the advances should be repaid at the end of the fiscal year. However, over recent years the
government has resorted to monetary financing to cover deficits in years where oil revenues have fallen short of expenditures.
This is not debt in the standard sense. It is denominated in domestic currency, carries no interest, has no repayment schedule,
and can be forgiven using administrative procedures without any economic implications.

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Annex IV. Country Engagement Strategy1

Libya is a fragile state with an enormous potential. The main policy priorities outlined below
center around a longer-term economic strategy to diversify away from hydrocarbons and to
foster stronger and more inclusive private sector-led growth. These priorities are aligned with
those in the Staff Report.
A. Context
1. The political situation remains unsettled. In 2021, after several years of open
conflict, the competing factions agreed to support the transition Government of National Unity
(GNU). The country, however, has remained fragmented. To maintain social stability, the
authorities follow a policy of equal but untargeted distribution of the country’s hydrocarbon
wealth.
B. Drivers of Fragility and Constraints to Reform
2. The post-Revolution collapse of the state strengthened tribal influence across

Libya and renewed regional rivalries. Major cities in the West, including Tripoli, are
controlled by competing militias that are nominally incorporated into the security forces and
put on the public payroll, but continue to operate outside the law. The lack of government
monopoly over the use of force, involvement of regional powers, and a fragmented security
environment contribute to Libya’s fragility.
3. Economic institutions are weakened by political interference and continued

divisions and operate under difficult circumstances. The National Oil Corporation (NOC),
for example, is vulnerable to frequent oil field blockades. Institutions responsible for economic
statistics struggle to collect data across the country, and regionally-collected revenues are
routinely delayed in reaching the Ministry of Finance. There is a lack of accountability
mechanisms, including an almost inoperative judiciary and a very weak civil society and media
oversight.
4. Climate change combined with underinvestment in critical infrastructure have

had devastating effects. In September, storm Daniel—fueled by warmer-than-usual water in
the Mediterranean—struck Libya, with some areas receiving the yearly dose of rainfall in a day.
The Eastern city of Derna was the most affected after two dams collapsed, washing away parts
the city. The rebuilding efforts have started but are complicated by the country’s political
divide.
1 This Annex summarizes the Country Engagement Strategy (CES) for Libya. The CES—prepared In line with the
IMF Strategy for Fragile and Conflict Affected States (see IMF Policy Paper 22/4)—provides an overview of the
drivers of fragility, constraints to reform, opportunities and sources of resilience, and reform priorities that
inform the strategy for Fund engagement. The CES draws insights from exchanges with the authorities,
development partners, and other stakeholders.

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C. Sources of Resilience and Opportunities
5. Libya possesses the resources to support reforms and economic development. In

addition to its oil and gas wealth, Libya has no public debt, high levels of foreign exchange
reserves, and a sovereign wealth fund—currently frozen per UN Security Council resolution—
valued at US$72 billion. When a political agreement is reached and the country stabilizes,
Libya’s substantial financial assets can be used to help rebuild critical infrastructure such as
schools and hospitals and support efforts to diversify the economy away from hydrocarbons.
6. In the long term, Libya has opportunities to diversify its economy. The country may
have a competitive advantage in the following areas.
• Fisheries. Despite a 2,000 km coastline on the Mediterranean Sea, Libya’s fishing industry
remains underdeveloped. The UN Food and Agricultural Organization (FAO) estimates
fishing production to be around 32,000 tones, well below the peak of 52,000 reached in
2009. 2 The sector has the potential to support economic diversification, non-oil GDP
growth and create employment.
• Tourism. Libya has good fundamentals to support a viable tourism sector. These includes a
rich heritage, historical sites, a strategic location, and a moderate Mediterranean climate.
The major obstacle for the successful development of this sector is political instability.
Investment in tourism infrastructure (airports, hotels) is also a prerequisite.
• Industry. There is potential to develop an industrial sector in Libya due to access to low-
cost labor markets in Africa, proximity to major markets (Europe), an abundance of space
and raw commodities, and cheap energy. Political stability and structural reforms to
facilitate foreign direct investments and transfer of knowledge are needed to develop the
sector.
• Agriculture. There is significant room to expand agricultural production. Libya imports

around 90 percent of its cereal consumption and is vulnerable to food price shocks, such
as the one due to the war in Ukraine. According to the FAO, only one half of the
470,000 hectares suitable for irrigation are currently in use due to concerns over the
depletion of underground water. 3 Improving irrigation techniques, water management,
and adopting drought-resistant crops to increase domestic agricultural production can
help reduce reliance on food imports, improve food security, and support economic
growth.
7. Libya has strong CD support from the international community; however,

absorption can be a challenge. Despite the fragility and conflict in Libya over the recent
2 Libya - Fishery and Aquaculture Country Profiles (fao.org).

3 See FAO GIEWS Country Brief on Libya.

LIBYA
years, a few institutions with good access to financial resources managed to recruit and retain
qualified staff and are able to absorb CD. Other institutions also appear to be eager to develop
their systems and staff, but in many cases lack sufficient resources, including financial and
qualified human capital. Most development partners are present in Libya, and some are based
in neighboring Tunisia. Due to the prevailing security situation, the Fund has provided CD in
alternative location such as Jordan and Tunisia, as well as virtually.
D. Engagement Strategy
8. The Fund stands ready to support Libya in rebuilding its economy for the benefit
of all citizens. Libya faces daunting economic challenges. These include an almost complete
reliance on revenues from oil and gas production, a bloated public sector, broad untargeted
subsidies and social benefits, weak financial intermediation, high informality, and an
underdeveloped private sector. The Fund will continue to provide policy advice tailored to
Libya’s fragile situation and aimed at initiating reforms in these key areas.
9. Revenue diversification is one of Libya’s overarching fiscal challenges. A heavy

reliance on revenues from oil and gas has been a key source of volatility in Libya’s fiscal
position over recent years. Diversifying revenue sources by improving tax and customs revenue
collection and widening the tax base would help to stabilize revenues and help to promote
fiscal sustainability. The Fund is providing TA on public financial management (PFM), budget
preparation, tax administration, compliance, and digitization, upgrade the custom’s systems
and processes, and can assist with the introduction and calibration of a value added tax (VAT).
10. Reforms to subsidies and social benefits are crucial to support long-term fiscal
sustainability. The Fund will work closely with the authorities by providing technical assistance
to help Libya transition from a costly and inefficient system of subsidies and social benefits to
a more targeted and efficient system that promotes fairness and better protects the most
vulnerable. Any fiscal savings from this transition can be channeled to development
expenditure, including rebuilding infrastructure, and improving health and education and
other services.
11. Monetary policy and the financial sector should be strengthened to promote
development. A law that prohibits interest rates from being levied, the CBL divide, and the
civil war has prevented the CBL from developing Islamic finance instruments to manage excess
system liquidity and complicated the issuance of key prudential and conduct regulations.
Authorities should work to develop Islamic monetary policy tools, address weak governance in
the financial sector, strengthen regulations and supervision, increase capacity, and remove
impediments to credit growth.
12. The Fund will continue to support capacity building at Libyan institutions. The
CD strategy emphasizes building and improving capacity at key Libyan institutions, such as the
CBL, MoF, Ministry of Planning, and the National Bureau of Statistics and Census. The strategy

LIBYA
focuses on training staff to use the latest frameworks, tools, and methods to guide economic
policy making, strengthening governance and anticorruption measures, improving economic
data through survey design and data collection, supporting the budget preparation process,
and strengthening PFM. IMF staff collaborates with other IFIs and international partners to
facilitate capacity development and to avoid duplication, and to support better
information-sharing across institutions.

LIBYA
Annex V. Data Issues
Table 1. Libya: Data Adequacy Assessment for Surveillance

Data Adequacy Assessment Rating 1/
D
Questionnaire Results 2/
Monetary and
National Government External Sector Inter-sectoral
Prices Financial Median Rating
Assessment Accounts Finance Statistics Statistics Consistency
Statistics
D B B D B D C
Detailed Questionnaire Results
Data Quality Characteristics
Coverage D C A D A
D C D A
Granularity 3/
NA B
Consistency C D D
Frequency and Timeliness D A A D B
Note: When the questionnaire does not include a question on a specific dimension of data quality for a sector, the corresponding cell is blank.
1/ The overall data adequacy assessment is based on staff's assessment of the adequacy of the country’s data for conducting analysis and formulating policy advice, and takes into consideration country-
specific characteristics.
2/ The overall questionnaire assessment and the assessments for individual sectors reported in the heatmap are based on a standardized questionnaire and scoring system (see IMF Review of the
Framework for Data Adequacy Assessment for Surveillance , January 2024, Appendix I).
3/ The top cell for "Granularity" of Government Finance Statistics shows staff's assessment of the granularity of the reported government operations data, while the bottom cell shows that of public debt
statistics. The top cell for "Granularity" of Monetary and Financial Statistics shows staff's assessment of the granularity of the reported Monetary and Financial Statistics data, while the bottom cell shows
that of the Financial Soundness indicators.
A The data provided to the Fund is adequate for surveillance.
B The data provided to the Fund has some shortcomings but is broadly adequate for surveillance.
C The data provided to the Fund has some shortcomings that somewhat hamper surveillance.
D The data provided to the Fund has serious shortcomings that significantly hamper surveillance.
Rationale for staff assessment. Despite recent improvements in data quality, coverage and timeliness, there are still significant gaps that impact staff’s ability
to conduct analysis and provide policy advice. A lack of coordination among authorities responsible for preparing and disseminating key economic data creates
significant delays and inconsistencies. Most surveys for national accounts stopped in 2011, the last establishment census was conducted in 2012, the last industry
survey was conducted in 2012 (2016 for large establishments); and the last agricultural census in 2007. Major political, economic, and demographic changes have
since taken place in Libya and there is a pressing need to restart periodic surveys and the authorities should adopt the System of National Accounts 2008. The
rating for External Sector Statistics (ESS) is due to gaps in compilation of balance of payments statistics given the weak institutional setting due to the political
uncertainties and the sizeable informal economic activities. Unavailability of sound data sources on unregistered informal transactions hamper the quality of
balance of payments statistics and affect the External Sector Assessment (ESA). The sources and methods used to compile the National Account Statistics (NAS)
are unclear and there is a lack of coverage and low response rate.
Changes since the last Article IV consultation. Previously identified data weaknesses remain broadly in place.
Corrective actions and capacity development priorities. To improve on ESS, actions taken included an IMF Technical Assistance Mission (November 2023)
that identified key areas that require development and prepared a roadmap for addressing those gaps. Libya is expected to start reporting IIP and quarterly BOP
by the end of 2024. CD for NAS includes technical assistance and increasing staff capacities for improving GDP compilation methods, implementing the supply
and use (SUT) framework and implementing the 2008 SNA in the Libyan national accounts. Meanwhile CD on prices will focus on updating the CPI basket. Futher
capacity development is needed for compiling national accounts and an expanded list of financial soundness indicators. PFM framework reforms, including
strengthening macro-fiscal and budget preparation functions, are needed to improve cash management controls and oversight.
Use of data and/or estimates different from official statistics in the Article IV consultation. Staff do not use data and/or estimates different from official
statistics.
Other data gaps. Additional statistics that could be compiled include import and export price indices, industrial production indices, construction activity, and
national disposable income.
Table 2. Libya: Data Standards Initiatives

Libya participates in the Enhanced General Data Dissemination System (e-GDDS) and first posted its metadata in December 2009 but is yet to disseminate the data
recommended under the e-GDDS.

LIBYA
Table 3. Libya: Table of Common Indicators Required for Surveillance

As of May 21, 2024
Publication under the Data Standards Initiatives through the
Data Provision to the Fund
National Summary Data Page
Date of Latest Frequency of Frequency of Expected Expected

Date Received 6 6 6,7 Libya⁸ 6,7 Libya⁸
Observation Data Reporting Frequency Timeliness
Exchange Rates 15-May-24 15-May-24 D D D D … D
International Reserve Assets and Reserve Liabilities of

1 Mar-24 May-24 M M M M 1M 2M
the Monetary Authorities
Reserve/Base Money Mar-24 May-24 M M M M 2M 5D
Broad Money Mar-24 Jun-24 M M M M 1Q 2M
Central Bank Balance Sheet Mar-24 Jul-24 M M M M 2M 5D
Consolidated Balance Sheet of the Banking System Mar-24 Aug-24 M M M M 1Q 2M
2
Interest Rates NA NA NA NA M ... … ...
Consumer Price Index Mar-24 May-24 M M M M 2M 1W
Revenue, Expenditure, Balance and Composition of

3 4 Mar-24 Apr-24 M M A ... 3Q ...
Financing ‒General Government
Revenue, Expenditure, Balance and Composition of
3 Mar-24 Apr-24 M M Q Q 1Q 1Y
Financing ‒Central Government
Stocks of Central Government and Central Government-
5 NA NA NA NA Q ... 2Q ...
Guaranteed Debt
External Current Account Balance Dec-23 May-24 Q I Q A 1Q 6M
Exports and Imports of Goods and Services Dec-23 May-24 Q I M A 12W 4M
GDP/GNP Dec-22 Feb-24 A I Q A 1Q 1Y
Gross External Debt Dec-21 Mar-22 A I Q ... 2Q ...
International Investment Position Dec-23 May-24 A I A ... 3Q ...
1/ Includes reserve assets pledged or otherwise encumbered, as well as net derivative positions.
2/ Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and
bonds.
3/ Foreign, domestic bank, and domestic nonbank financing.
4/ The general government consists of the central government (budgetary funds, extra budgetary funds, and social security
funds) and state and local governments.
5/ Including currency and maturity composition.
6/ Frequency and timeliness: (“D”) daily; (“W”) weekly or with a lag of no more than one week after the reference date; (“M”)
monthly or with lag of no more than one month after the reference date; (“Q”) quarterly or with lag of no more than one quarter
after the reference date; (“A”) annual.; ("SA") semiannual; ("I") irregular; ("NA") not available or not applicable; and ("NLT") not
later than;.
7/ Encouraged frequency of data and timeliness of reporting under the e-GDDS and required frequency of data and timeliness of
reporting under the SDDS and SDDS Plus. Any flexibility options or transition plans used under the SDDS or SDDS Plus are not
reflected. For those countries that do not participate in the IMF Data Standards Initiatives, the required frequency and timeliness
under the SDDS are shown for New Zealand, and the encouraged frequency and timeliness under the e-GDDS are shown for
Eritrea, Nauru, South Sudan, and Turkmenistan.
8/ Based on the information from the Summary of Observance for SDDS and SDDS Plus participants, and the Summary of
Dissemination Practices for e-GDDS participants, available from the IMF Dissemination Standards Bulletin Board
(https://dsbb.imf.org/). For those countries that do not participate in the Data Standards Initiatives, as well as those that do have
a National Data Summary Page, the entries are shown as "..."

LIBYA
STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION—
May 30, 2024
INFORMATIONAL ANNEX
Prepared By Middle East and Central Asia Department

(In consultation with other departments)
CONTENTS
FUND RELATIONS ________________________________________________________________________ 2

LIBYA
FUND RELATIONS
(As of May 30, 2024)
Membership Status: Joined 09/17/58; Article VIII
General Resources Account SDR Million Percent Quota

Quota 1,573.20 100.00
Fund holdings of currency (Exchange Rate) 1,165.00 74.05
Reserve tranche position 408.21 25.95
SDR Department SDR Million Percent Allocation

Net cumulative allocation 2,580.54 100.00
Holdings 3,187.33 123.51
Outstanding Purchases and Loans: None
Latest Financial Arrangements: None
Projected Payments to Fund1
(SDR Million; based on existing use of resources and present holdings of SDRs):
Forthcoming
2024 2025 2026 2027 2028
Principal
Charges/Interest 0.03 0.03 0.03 0.03 0.03
Total 0.03 0.03 0.03 0.03 0.03
1 When a member has overdue financial obligations outstanding for more than three months, the amount of such
arrears will be shown in this section.
Implementation of HIPC Initiative: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable
Implementation of Catastrophe Containment and Relief (CCR): Not Applicable
Safeguards Assessments: Not Applicable
Exchange Rate Arrangements
The de jure and de facto exchange rate arrangements are a conventional peg vis-à-vis the SDR. In
June 2003, the Central Bank of Libya (CBL) adopted a conventional fixed peg to the SDR at a rate of
LD 1 = SDR 0.5175 and Libya accepted its obligations under Article VIII, Sections 2(a), 3, and 4 of the
Articles of Agreement. On April 30, 2015, controls were imposed on foreign currency, that required
the CBL approval for import letters of credit (LCs) and limited the amount of foreign currency for
personal use. On January 3, 2021, the CBL devalued the LD to the rate of LD 1= SDR 0.1555 and

LIBYA
relaxed currency controls by increasing the limits available for LCs and allowing access to FX for
SMEs through a preloaded card. As a result, the gap between the official and the parallel exchange
rates narrowed. However, the gap has been widening since November 2023, and stood at around
50 percent in March 2024. In early 2024, the authorities imposed a temporary 27 percent tax on all
foreign exchange purchases, while announcing the relaxation of some of the previously enacted
restrictions on imports of non-essential goods and services. Staff is currently engaging with the
authorities to assess Libya’s exchange system to determine if any measures the authorities have
introduced are inconsistent with their obligations under Article VIII. To the extent any of the
measures are inconsistent with Article VIII, staff will encourage the authorities to either eliminate
them or request their approval by the Board, if the authorities meet the approval criteria.
Article IV Consultations
The last Article IV staff report (23/201) was discussed by the Executive Board on May 24, 2023, after
a 10-year pause due to civil unrest and data limitations. Libya is now on a 12-month consultation
cycle.
Technical Assistance
Since the Article IV in 2023, engagement with the authorities has continued through a Staff Visit in
November 2023 and providing technical assistance. The missions fielded mainly in Tunis and
Amman and covered the areas of AML/CFT, Public Financial Management (PFM), revenue
administration, national accounts, balance of payments and price statistics, financial regulation, and
supervision. The following TA missions took place in 2021, 2022, 2023 and first half of 2024.
1. May 2024 (upcoming): MCM TA – Islamic Banking Supervision and Regulation

2. 2023: FAD mission to review functioning of core revenue administration processes
3. 2023: FAD mission on restoring core Public Financial Management (PFM) functions
4. 2023: ICD TA on Macroeconomic frameworks – Ministry of Finance
5. 2023: STA mission – Financial Institutions
6. February 2023: METAC mission on the compilation of Producer Price Indices (PPIs).
7. January 2023: METAC mission on the digitalization of the tax administration (Second mission).
8. December 2022: FAD/METAC mission on reviewing public financial management framework and
identifying reform priorities and further CD needs.
9. November 2022–February 2023: FAD Peripatetic advisor for ASYCUDA functionalities
development.
10. November 2022: METAC mission on the digitalization of the tax administration (first mission).
11. August 2022: METAC/FAD mission on the implementation of core custom functions in
ASYCUDA World (AW) IT management system.
12. August 2022: METAC study tour of Port in Jordan by Libyan officials about the use of customs
automated system
13. July 2022: STA mission on compiling the monetary and financial statistics for the central bank
and depository corporations.

LIBYA
14. January 2022: METAC mission on the methodology to update the CPI and developing an
indicative roadmap.
15. June 2022: METAC mission on good practices of taxpayer register.
16. January 2022: METAC mission on budget preparation process and draft budget circular.
17. January 2022: METAC mission on the compilation of annual national accounts.
18. January 2022: FAD mission on Review of revenue administration reform plan and priorities.
19. November 2021: METAC mission to restore core Public Financial Management functions.
20. September 2021: METAC follow-up mission on cash forecasting.
21. April 2021: METAC mission on cash management
FSAP Participation, ROSCs, and OFC Assessments N/A

LIBYA
STAFF REPORT FOR THE 2024 ARTICLE IV
June 14, 2024 CONSULTATION—SUPPLEMENTARY INFORMATION
Approved By Prepared by the Middle East and Central Asia Department.

Subir Lall (MCD) and
Boileau Loko
This supplement provides additional information to the Staff Report (SM/24/149) circulated
to the Executive Board on May 31, 2024. It sets out staff’s assessment of Libya’s foreign
exchange system.
1. Staff and the Libyan authorities have had an ongoing dialogue over the
past year regarding Libya’s exchange system. Staff has identified certain measures
subject to Fund approval under Article VIII, Sections 2(a) and 3. These include:
a. An exchange restriction arising from removal of normal short-term banking and

credit facilities which were hitherto available to importers for the purpose of funding
their documentary credits, given that documentary credits are required to import
certain goods and services in Libya;
b. An exchange restriction arising from the requirement to provide a tax clearance

certificate and a certificate of payment of social security obligations, unrelated to the
underlying transactions, in support of requests for documentary credits for imports;
c. An exchange restriction arising from limitations on the availability of foreign

exchange for invisible transactions (personal purposes, studies abroad and medical
treatment abroad);
d. An exchange restriction arising from limitations on the transferable percentage of the

salaries of expatriate workers that can be remitted;
e. An exchange restriction and an MCP arising from the imposition of a 27 percent tax
on all foreign exchange transactions 1
2. Authorities’ views: The authorities acknowledged that the above measures are
subject to Article VIII, Sections 2(a) and 3. However, in Libya’s current situation, the
1
Staff has assessed this measure as an outflow CFM. However, this measure will not be assessed for appropriateness
under the Institutional View.

LIBYA
restrictions are necessary for balance of payments reasons as well as to curb money laundering
and the financing of terrorism and smuggling. The authorities plan to ease restrictions as
conditions allow.
3. Staff recommends approval of the exchange restriction and MCP arising from the
tax on FX transactions. The 27 percent tax on all foreign exchange transactions was introduced
for balance of payments reasons and does not discriminate among members. As it will sunset at
end-2024, there is a timeline for removal. This measure meets the conditions for approval.

Statement by Mr. Bijani, Executive Director for Libya
and Mr. Sassanpour, Senior Advisor to Executive Director
July 1, 2024
On behalf of our Libyan authorities, we thank the staff team for constructive engagement and open and
frank exchange of views during the 2024 Article IV Consultation discussions, held in Tunis. The Libyan
authorities highly value the staff’s professional and balanced policy advice and are in broad agreement
with the staff’s assessment and recommendations. They are also grateful to the IMF Executive Board and
management for their continued support.
I. Introduction
The 2024 Article IV Consultation carried forward the discussion from the 2023 Consultation which was
the first such engagement after a hiatus of ten years due to the 2014-2021 domestic armed conflict. The
conflict entailed not only loss of Libyan lives and destruction of property and infrastructure but also a
costly lost opportunity to rebuild the country after the upheavals of the 2011 Revolution. The progress in
policy implementation since the 2023 Consultation has been mixed: while good progress has been made
in some areas, including reintegration of the financial system and rebuilding institutions, little progress
has been made in strengthening public financial management and addressing the fundamental weaknesses
of the Libyan economy, some of which predate even the 2011 Revolution.
Libya is a fragile state with fragmented institutions and competing authorities. The drivers of fragility in
Libya are well-articulated in the staff’s Country Engagement Strategy, with which the authorities are in
broad agreement. Libya’s continued fragility has had serious adverse economic and social implications.
The political divide has been the main constraint to implementing broad-based reforms, with material
progress in key reform areas remaining contingent on a durable resolution of the country’s political
impasse.
II. Political Context
After the popular uprising and the ensuing 2011 Revolution, Libya experienced a brief period of relative
peace and nation rebuilding before the East-West rivalry, fueled by active direct and indirect foreign
interference, triggered a seven-year armed conflict between rival factions that ended in 2021. Since then,
although the political situation remains tense there has been no armed confrontation in compliance with
the ceasefire agreement. During the conflict, the Fund maintained regular close contact with the Tripoli-
based, UN-recognized, Government of National Accord. In 2021, after the end of the conflict, the political
and regional factions agreed to support the transitional Tripoli-based, UN and internationally recognized,
Government of National Unity which was given a mandate to hold national elections by end-2021. The
progress towards holding national elections, however, has been impeded by persistent political
disagreements over the legal framework for the elections, eligibility of presidential candidates and the
security challenges facing the High National Election Commission. The United Nations has been leading
the mediation efforts but the lack of international cohesiveness and collective action, and continued
foreign interference in Libyan affairs, have consistently hindered these efforts.
III. Social Context

Libya has been a welfare state for decades maintaining social cohesion through wide distribution of
hydrocarbon income among the population. The social support mechanism, however, has been very
costly, untargeted and inefficient. The high public sector employment, rising public wages and generous
benefits, and the highly subsidized fuel and low administered prices for food and other mass consumption
items should be viewed in that context. Even during the armed conflict and since then, the Tripoli-based
Ministry of Finance and the Central Bank of Libya (CBL) ensured that public sector wages of the parallel
government in the East were paid in full and on time, and subsidized fuel prices were available across
Libya. The authorities are fully aware of the vast resource loss and the significant price distortions and
economic disincentives that the social policy has entailed. The wage bill and subsidies together account
for close to two-thirds of total government spending. Moreover, the high government wages and benefits
and insufficient controls have created tens of thousands of ghost workers 1 and the subsidized fuel prices
(among the lowest in the world) have perpetuated extremely lucrative smuggling to neighboring countries
(and beyond) through Libya’s long porous borders.
IV. Recent Economic Developments and Outlook
Libya’s growth performance, government revenue and balance of payments developments are highly
dependent on hydrocarbon production and exports and volatile prices in the international energy markets.
Libyan oil production, in turn, reflects the OPEC+ oil output decisions, and stoppages due to internal
political and security conditions (in 2022 and the latest temporarily in January 2024). These (often
unpredictable) developments have resulted in sharp fluctuations of the overall and oil-sector real GDP, but
real non-oil activity has been broadly shielded by government spending, but ultimately financed by loss of
foreign reserves. Despite the sharp variations of output, the rise in international food and commodity
prices and depreciation of the Libyan dinar in the parallel market, inflation has been subdued as prices of
most goods and services are administratively fixed at low levels. That, despite Libya importing around
half of the households’ consumption basket and as high as 90 percent of its cereals needs. Libya’s internal
and external balances—both recording sizable yet declining surpluses in recent years—reflect the
dominant yet fluctuating hydrocarbon revenue and fiscal spending, with Libya’s ample FX reserves
continuing to absorb the domestic financial imbalances. The CBL’s sizable FX holdings include the
foreign assets of LIA--the Libyan Investment Authority (Libya’s sovereign wealth fund)—which are
managed but not owned by the CBL. The CBL’s “free liquid reserves” are much lower. Additionally, a
significant portion of LIA’s overall foreign assets has been frozen since 2011 under a UN Security
Council resolution (ostensibly for safe keeping in the aftermath of the 2011 Revolution), with LIA having
authority to make investment decisions on only a portion of its assets. The frozen assets now represent a
significant lost opportunity and is contrary to the declared objective of preserving Libya’s assets for future
generations as the inability to manage the assets has led to substantial losses.
The medium-term outlook for the Libyan economy is dependent externally on oil market developments
and regional conflicts with implications for oil prices and transportation costs, and internally on the pace
of progress in improving the macroeconomic policy framework and efforts to diversify the economic and
export base (more below) which, in turn, are largely contingent on a durable political reconciliation.
While international oil prices are forecast to stabilize at levels lower than the current levels, the
authorities are planning to increase oil production from the current level of 1.2 million barrels per day
1
Public sector accounts for 90 percent of formal employment and some 2.2 million persons (about 30 percent of
the total population) are on government payroll.

(mbd) to initially 1.5 mbd over the next 2-3 years and ultimately to 2 mbd over a longer horizon. The
planned increase in production, however, requires large investments by the National Oil Corporation to
boost the production capacity.
V. Policy Framework
The authorities are fully cognizant of the sizable negative impact of fiscal profligacy on the exchange rate
and reserves. Fiscal spending surged in 2023, reflecting the large (unwarranted) increase in the wage bill
as well as higher-than-expected energy subsidies, financed by CBL money creation. In fact, the rate of
increase in broad money in 2023 was the highest since 2011, because of uncontrolled spending, and lifted
public debt to over 90 percent of GDP 2. Libya has no external debt and is in fact an external creditor in
view of its past generous financial support to low-income countries, mostly in Africa.
With a procyclical fiscal policy without a short- or medium-term anchor, and with the virtual absence of
monetary policy instruments to control liquidity injections associated with deficit financing, the exchange
rate acts as the nominal anchor for the economy. The spending surge in 2023 increased the demand for
foreign exchange and exerted undue pressure on the exchange rate, with the parallel exchange rate
diverging sharply from the official rate. In response, the CBL opted to impose a temporary 27 percent
“fee” on the US$ selling rate by commercial banks, effective March 15, 2024, with the proviso that
foreign exchange is available for sale in all banks in Libya. 3 The Decree stipulates that the proceeds from
the fee—temporarily parked at the CBL—are to be used to cover future development spending and/or to
repay public debt. The fee expires at end-2024, conditions permitting, but could be adjusted in either
direction prior to the expiration. Since the introduction of the fee, the parallel exchange rate has
appreciated by 10 percent and held steady, but still has a 10 percent premium over the official rate plus
the fee.
The CBL considers the fee as the second-best solution to curb the excessive demand for foreign exchange
and safeguard foreign reserves. The authorities believe that the first-best solution, namely controlled
spending in line with a unified approved budget, within a defined resource envelope, with clear priorities
and anchored by a medium-term framework, is currently politically unfeasible. Reforming energy
subsidies and the public sector administration policy remain medium-term priorities until there is
sufficient political consensus on reforms. The authorities fully recognize that inaction is very costly, only
benefitting the vested intertest groups and encouraging smuggling at great cost to the treasury and to
current and future generations of Libyans.
The imposition of the FX fee permitted the CBL to remove some of the FX restrictions that had been
imposed earlier to safeguard reserves. The authorities feel that, under the current situation, the remaining
restrictions are necessary for balance of payments purposes and to curb money laundering and financing
of terrorism and smuggling. The restrictions will be eased or lifted as conditions permit.
VI. The Issue of Fifty (50) Dinar Bank Notes
2
The public debt in Libya represents the accumulated deficit financing—it is denominated in Libyan dinar, carries
no interest and has no repayment schedule. Ratios to GDP should be viewed with caution given the sharp
variability of nominal GDP.
3
Decree No. 15 of 2024 issued by the House of Representatives on the recommendation of the Governor of the
CBL.

The 50-dinar bank note issued by the Tripoli-based CBL is the largest denomination of bank notes in
circulation. In the past few years prior to 2023, similar but still distinguishable 50-dinar notes, printed
abroad, began circulating in the East. As part of the broad agreement on the process of central bank
reunification, the stock of these notes was frozen and the CBL accepted them at par with the CBL-issued
original 50-dinar notes. In late 2023, two different sets of similar looking 50-dinar notes—clear
counterfeits of unknown origin and quantity—began circulating in the East. In response, the CBL decided
to withdraw all 50-dinar notes from circulation and replace the stock of CBL-issued 50-dinar notes plus
the first set of redeemable notes originating in the East with newly issued 10-dinar notes, with a neutral
impact on the overall liquidity once all the bills are replaced. The surrender period is through August
2024. The authorities believe that the lower denomination notes may also help to curb cross-border cash
transactions mostly involving smuggling and other illicit activities.
VII. Central Bank Reunification and Financial Sector Stability
The CBL has been a pillar of stability since the 2011 Revolution and especially during the 2014-2021civil
war and the political stalemate since then. The CBL, the guardian of Libyan foreign assets, ensured that
all genuine FX requirements of the Libya-wide economy, especially food, medicine and essentials, were
met. In late 2022, as part of the reunification process of Libyan institutions fragmented by conflict, the
CBL working closely with its Eastern counterpart began the process of central bank reunification. The
CBL Board was consolidated, and the governor of the central bank’s eastern branch was appointed the
deputy governor of the reunified CBL.
The reunification efforts have led to improved coordination in banking system liquidity, management and
supervision. The CBL has been proactive in enhancing the prudential framework and guiding banks to
increase their capital. The Financial Information Unit, active in investigating suspicious financial
activities, including money laundering and terrorism financing, has also been strengthened significantly.
Further progress in coordination in these and other areas, including integration of the payment systems
and unification of accounting procedures, largely depend on the pace of political reconciliation. The
authorities are determined to promote financial stability and undertake a comprehensive reform of the
banking system in line with the roadmap presented by staff during the 2023 Article IV Consultation.
VIII. Climate and the Derna Tragedy
With a long Mediterranean shoreline in the north and an even longer border with the Sahara, Libya is
highly prone to climate-related disasters. The unprecedented heavy precipitation that contributed to the
collapse of two flood-control Wadi Derna dams in September 2023 was a climatic disaster occurring,
according to experts, once in a few centuries. Reportedly, over 400 mm of rain fell in 24 hours compared
with an average precipitation of about 1.5 mm in the Derna region in September. The flash floods caused
an unfathomable human tragedy and displacement, with 4,000 confirmed dead and 10,000 missing at sea
and presumed dead, and at least 34,000 persons displaced. The initial damage and losses were estimated
by the Rapid Damage and Needs Assessment (a joint report by the World Bank, UN and the EU) at
3.6 percent of Libya’s 2022 GDP, and the disaster impacted about 1.5 million people. The Derna floods
have brought into a sharper focus the climate-related risks that Libya and the countries in southern
Mediterranean are facing, where the main climate concern is, ironically, water scarcity.

IX. Economic Diversification
The authorities fully recognize the criticality of diversifying away from hydrocarbons in order to bolster
the economy’s resilience and reduce its exposure to oil market volatility. This is a medium-to-longer term
objective where Libya could leverage its vast energy and financial resources and labor availability from
Africa to strengthen the economy’s non-hydrocarbon base in a process facilitated by gradually reducing
the state’s presence in non-strategic activities and measures encouraging greater private sector
participation. There is already a large contingent of African labor working in the informal sector in Libya
repatriating their earnings and savings to home countries. While industry and tourism hold long-term
potential, there are more immediate opportunities in fisheries and agriculture that could be tapped which
would also improve food security and reduce Libya’s vulnerability to international food price shocks.
X. Governance Issues
The authorities acknowledge the governance challenges that Libya is facing and agree with staff that
stronger efforts are needed to improve governance, fight corruption and increase transparency and
accountability. The Libya Audit Bureau—an independent office—is the overarching authority ensuring
compliance of government agencies with established rules and regulations. 4 The authorities look forward
to the planned comprehensive review of governance during the 2025 Article IV Consultation. They attach
high value to the Fund staff’s independent assessment since secondary assessments could be at times
inadequate or even misleading 5.
XI. Capacity Development (CD)
Libya has an immense need for CD support and the Fund and other development partners have risen to
the occasion and are responding. The authorities have expressed their appreciation to the Fund for the
technical support (both HQ-based and from METAC) in their institution building efforts, strengthening
tax and customs administration, and addressing Libya’s substantial data gaps. The authorities have
requested further technical support in budget preparation, monetary policy, national accounts, labor
market statistics, CPI rebasing, PFM and developing a macro fiscal unit. They agree with staff that to
optimize the technical support being received from multiple multilateral and bilateral sources better
coordination is needed on their part and are determined to do so.
4
The Head of the Libya Audit Bureau and its senior officials have been regularly participating in staff discussions
with the CBL and government officials during the consultations.
5
In Box 2—Taking Stock of Libya’s Governance Challenges—in the Staff Report, Libya’s governance indicators are
compared with MENA and OECD frontiers, and the year 2011 (the year of the Libyan Revolution) is used as the base
year for the assessment of progress in indicators. The authorities believe that it would be more useful to compare
the Libya’s governance indicators to other countries emerging from protracted internal conflicts, and that 2011 may
not be the best benchmark. Cases in point are indicators of “Political Stability and Absence of Violence and
Terrorism,” “Government Effectiveness” and “Rule of Law” are highest (strongest) in the year that witnessed
foreign intervention and a violent overthrow of the Gaddafi regime.

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IMF Country Report No.

• An Informational Annex prepared by the IMF staff.

• A Staff Supplement updating information on recent developments.

• A Statement by the Executive Director for Libya.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

International Monetary Fund

© 2024 International Monetary Fund

©International Monetary Fund. Not for Redistribution

IMF Executive Board Concludes 2024 Article IV Consultation

The outlook continues to be dominated by the dynamics of hydrocarbon production. The

Executive Board Assessment 2

©International Monetary Fund. Not for Redistribution

©International Monetary Fund. Not for Redistribution

Libya: Selected Economic and Financial Indicators, 2021–29

©International Monetary Fund. Not for Redistribution

Recommendations. Libya needs to manage public expenditure consistent with its

©International Monetary Fund. Not for Redistribution

RECENT MACROECONOMIC DEVELOPMENTS _________________________________________________ 4

OUTLOOK AND RISKS ___________________________________________________________________________ 6

POLICY DISCUSSIONS ___________________________________________________________________________ 6

AUTHORITIES’ VIEWS _________________________________________________________________________ 11

STAFF APPRAISAL ____________________________________________________________________________ 12

2 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution

3. Monetary Sector, 2018–2023 __________________________________________________________________ 19

INTERNATIONAL MONETARY FUND 3

©International Monetary Fund. Not for Redistribution

RECENT MACROECONOMIC DEVELOPMENTS

4 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution

5. The authorities have been trying

credit and lowered the limits on 7 Parallel Official

individuals’ foreign exchange purchases, 6.5

resulting in the widening gap between the 6

exchange purchases, while announcing 4.5

the relaxation of some of the previously-

and services either subsidized or

to track exchange rate movements, even 16

though imports are estimated to 8

constitute around one half of the 0

consumption basket. Moreover, the -8

reported CPI has limited product and -16

geographic coverage. The authorities are

working on expanding coverage and

INTERNATIONAL MONETARY FUND 5

©International Monetary Fund. Not for Redistribution

Gross Official Reserves

fall in oil prices. 3 Libya’s external position was 100

broadly in line with fundamentals and desirable 80

policy settings (see Annex II) and the CBL has 60

maintained reserves at a comfortably high level,

at around three years of imports. 0

8. The outlook is dominated by the dynamics of hydrocarbon production, which is

6 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution

A. Improving Policy Coordination Through Proper Budgeting

B. Completing Central Bank Reunification and Maintaining Financial

and of the lack of policy coordination among key economic institutions.