Libya Faces Enormous Economic Challenges: World Bank

Washington: The Libyan economy faces major challenges, including recurring disruptions to the oil and gas sector, the fragmentation of state institutions, and ongoing conflict, according to a new World Bank report.
 
The new spring 2021 edition of the Libya Economic Monitor details how, for most of 2020, the performance of the Libyan economy was the worst in recent record. 
 
A 9-month blockade that began in January 2020 cut the country’s crude oil to less than one-sixth of 2019 values—the worst monthly performance since the beginning of the recent conflict.

The blockade was debilitating for Libya’s acutely undiversified economy, which relies on oil and gas for over 60% of aggregate economic output and over 90% of both fiscal revenue and merchandise exports. 
 
Fiscal revenues lost from the blockade amounted to around US$11 billion for the year, according to the Central Bank in Tripoli. 
 
These problems were exacerbated by the covid-19 pandemic, which inflicted further economic and social dislocation on the war-torn country, which already suffered from a degraded healthcare system. 
 
Overall, the Libyan GDP plunged by 2020 despite resuming oil production in the last quarter.
 
"Libya faces enormous economic challenges and desperately needs unified institutions, good governance, strong political will, and long overdue reforms," said Jesko Hentschel, World Bank Country Director for the Maghreb and Malta, in a press release on Thursday.
 
"The Libyan people have gone through so many tribulations. The security and political environments have seen signs of improvement lately. The road ahead will not be smooth, but it provides hope for peace, stability, and development," Hentschel stated.
 
The economic monitor estimates that the Libyan economy will partially recover in 2021 from the slump in 2020. 
 
GDP growth is forecast at 67% in 2021 in real terms. Oil and gas output will remain the main driver of economic growth in 2021. 
 
Higher international oil prices will help support the overall rebound in oil output, filtering through stronger government consumption and investment, and in turn supporting a recovery in private consumption.
 
Growth in the non-oil sector will remain subdued, impeded by ongoing conflict; poor provision of services, including power; and the lingering effects of the covid-19 pandemic.
 
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