Higher oil output supports Libya’s economic rebound says IMF

But lower oil prices bring pressure

Non-oil growth of 6% predicted

Issue of cash hoarding persists

Libya’s economy is projected to rebound in 2025, supported by the expansion of oil production, the International Monetary Fund has said.

The growth is likely, however, to moderate in the medium term, it said.

Non-hydrocarbon growth will remain at 5 to 6 percent this year, driven by sustained government spending, the IMF predicted.

The country’s crude oil production jumped by 141,000 barrels per day (bpd) to 1.2 million bpd in November, according to Opec, the oil exporter’s club.

The IMF said Libya’s current account and fiscal balances were likely to remain under pressure over the medium term because of likely lower oil prices and continued demands for the government to spend its entire revenues.

“The outlook is subject to elevated uncertainty and risks are tilted to the downside, particularly from domestic political instability, oil price volatility, intensifying regional conflicts and deepening geo-economic fragmentation,” the fund said.

Libya’s central bank devalued the dinar by 13 percent earlier this month and tightened foreign exchange restrictions, to alleviate pressures on reserves. 

The government needs to reduce the gap between the official and parallel exchange rates, the IMF said, suggesting phasing out the foreign exchange tax and easing foreign currency restrictions.

Despite the central bank’s efforts to inject new banknotes, promote electronic payments and accelerate financial inclusion, the issue of cash hoarding is persisting and confidence needs to be restored in the financial sectors, it said.

The IMF said that a lack of access to finance and foreign currency, the dominance of public employment and poor governance were major impediments to the growth of the private sector in Libya.

An economic reform plan that focused on private sector development, starting with upgrading regulatory frameworks, enhancing access to finance and improving the security situation, was required, the IMF said.

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