The World Bank in Libya

Libya, an oil-rich country strategically located at the crossroads of Africa, the Middle East, and Europe, holds rich yet unfulfilled potential. Following an inconclusive transitional period, Libya remains mired in a political stalemate. The institutional legacy of the country's complex past, followed by a decade of instability, has resulted in development indicators and institutional capacity that do not align with Libya's status as a middle-income country. Libya's conflict has not only caused significant loss of development gains for Libyans but has also directly impacted the welfare of neighboring countries, the Sahel, and Europe

The oil and gas sector drives the Libyan economy and remains undiversified, with a large public sector. In 2023, the oil and gas sector represented 60 percent of GDP, 94 percent of exports, and 97 percent of government revenues. The private sector remains underdeveloped but has significant growth potential and currently employs nearly 14 percent of the workforce.

Despite increasing oil production, years of conflicts and divisions have resulted in insufficient public investment and infrastructure maintenance. Additionally, the state's significant involvement in the economy has hindered the development of the private sector. Consequently, the population experiences limited access to quality health services, an outdated education system, disruptions in the provision of safe drinking water, and an unreliable electricity supply.

The Libyan economy contracted by 2.9 percent in 2024. The resolution of the Central Bank of Libya (CBL) crisis in October 2024 led to a 35 percent surge in oil production in Q4 2024, but average production for the year was below 2023 levels, causing a six percent contraction in oil Gross domestic product (GDP). Non-oil GDP grew by two percent, driven by a ten percent increase in public wages. In January 2025, the NOC increased production to 1.4 million barrels per day (mbpd), aiming for 1.6 mbpd by 2025. 

The budget surplus stood at 0.3 percent of GDP in 2024. Total revenues were 56.7% of GDP, with non-oil revenues significantly increasing due to foreign currency exchange taxes (ten percent of GDP) and CBL dividends (three percent of GDP). This increase in non-oil revenues helped offset the decline in oil revenues caused by lower production and prices. Public spending was 56.4 percent of GDP, up two percent from 2023, mainly due to higher wages, while capital expenditure dropped by 77.8%. In December 2024, the GNU transferred LYD 21 billion from the unspent development budget to the Ministry of Finance for future projects in 2025.

The foreign currency tax introduced in March 2024 tightened access to foreign currency, reducing merchandise imports by six percent over ten months. Oil exports fell by nearly nine percent due to export facility shutdowns and declining prices, narrowing the merchandise trade surplus by 12 percent to 23 percent of GDP.

Last Updated: Apr 25, 2025

The World Bank Group (WBG) is committed to continuing support to Libya with technical assistance and analytical services.  The WBG’s program focuses on supporting Libya’s challenging transition towards a sustainable future and provides analytical and advisory services that contribute to building transparent and effective country systems; inform local service delivery; and improve the country’s data and knowledge base.

The WBG support is aligned towards helping Libya address its fragility challenges and move towards peace and political settlements over time. Fostering dialogue about challenges and choices while supporting some of the necessary preconditions for moving forward (data, institutional capacity, cooperation between local and national authorities, international coordination, etc.) is at the heart of the strategy. The engagement prioritizes activities that address drivers of conflict and support resilience.

The development of Libya’s private sector is critical for the country’s sustainable recovery and growth. The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) have been increasing outreach to the Libyan private sector to identify opportunities to support its development. Starting with a series of diagnostics, IFC activities include supporting the entrepreneurship ecosystem, improving access to finance with a focus on women and medium and small enterprises, and public-private partnerships. MIGA guarantees can play an important role in rebuilding the infrastructure once the political situation allows.

Last Updated: Apr 25, 2025

Current activities include:

• Building successful partnerships. Pooled funding and partnership platforms bring critical benefits for donor coordination and harmonization of objectives, joint leverage in policy dialogue and reform advocacy with government, impact, efficiency, shared risk management, funding predictability, and monitoring framework. Accordingly, the World Bank Group launched the Libya Development Trust Fund (LDTF) in December 2023 in partnership with the German and British Governments, with the overarching goal of providing a strategic alignment framework for the WBG and its development partners towards Libya's development goals. The LDTF Umbrella program builds on the World Bank's two decades of experience as a development partner for Libya and seeks to leverage its knowledge of the country's past and current economic, sectoral, and contextual challenges. Given the country's multifold challenges and limited capacity base, external support is essential to support a path towards sustainable development. This instrument draws on the Bank Group's longstanding engagement in transition contexts, post-conflict reconstruction and recovery efforts, and its deep experience with financing mechanisms and partnership platforms across the globe, including in conflict environments. The LDTF's main pillars are to support (1) reform and policy decisions and (2) a renewed social contract and service delivery.

• Giving a Voice to the Youth. Political divisions and institutional fragmentation allow for limited public debate around socioeconomic issues and exclude large portions of the population, mainly the youth. The LDTF partnered with Luiss Guido Carli University and the Mediterranean Universities Union to launch the Youth Economic Research Platform in June 2024. Its objective is to provide an inclusive platform for young Libyans to contribute to discussing their country's economic development trajectory. The platform supports the establishment of a network of young researchers who work on issues related to the Libyan economy.  Additional information on the program can be found here.

• Addressing Drivers of Fragility and Supporting Inclusive Growth. The WB team is preparing the Libya Growth and Jobs Report (LGJR) as an opportunity for policy dialogue and a long-term vision in Libya. The primary goals of the LGJR are to help the country address the drivers of fragility and lay the foundations for more inclusive, resilient, and sustainable growth and jobs. It aims to help: 1) Libyan authorities develop a shared long-term vision or development strategy; 2) contribute to the UN-led peace process through economic analysis and advice; and 3) help elevate policy dialogue and stakeholder engagement. 

• "Shades of Libya: Contrasts, Hope and Resilience" photobook (available here). The book showcases Libya's diverse landscapes, rich culture, and resilient spirit. Global media reporting on Libya tends to focus on a narrative of crisis; this photobook aims to offer a more nuanced and broader narrative - one focused on the diversity and rich potential of Libya and its people. Primarily featuring the work of young, talented Libyan photographers, the photo book serves as a companion to "The Long Road to Inclusive Institutions in Libya: A Sourcebook of Challenges and Needs" (World Bank, 2023), which contributes to the collective understanding of sector challenges and development needs in Libya. The photobook was launched at an event in the Old Town of Tripoli on February 20, 2025, attended by the World Bank's Regional Vice President for the Middle East and North Africa, the Minister of Finance, and high-level representatives from international partners and the Libyan government.

• Assessing the Failure Modes of the Derna Dams.  Following the devastating floods that hit eastern Libya in September 2023, the World Bank, together with the European Union and the United Nations, developed the Libya Rapid Disaster and Needs Assessment (RDNA). Building on the RDNA, the World Bank, together with the Netherlands, UNICEF, and the International Commission for Large Dams, assessed the failure of the Wadi Derna Dams to provide recommendations for dam safety across the country. The report is set to be published in 2025.

Last Updated: Apr 25, 2025