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Libya remains in a political stalemate with competing centers of power claiming legitimacy for control of the country. Negotiations have yet to reach an agreement on a constitutional framework that could pave the way to elections and therefore allow for the restoration of a unitary government. The contested legitimacy of political institutions and leadership contributes significantly to insecurity, economic loss, and social fragmentation.

A stable and secure Libya would have positive regional spillovers for two continents, given its strategic location at the gateways of Europe, Africa, and the Middle East. At the end of 2021, Libya ranked in the top 10 countries for globally proven oil and natural gas reserves, holding nearly 3 percent of these. In 2021, nearly 71 percent of Libya’s crude oil and condensate exports were imported by Europe (specifically Italy, Germany, and Spain). However, due to the protracted conflict, Libya’s oil production has been significantly lower than its capacity. Achieving stability and security could help Libya achieve its plans to nearly double oil production by 2025, with an impact on global oil supply. Stability in Libya could also help absorb economic migrants from neighboring countries, such as Tunisia and Egypt, as well as sub-Saharan Africa. Such developments would reduce pressure on Europe’s border management and help to increase the flow of remittances to countries of origin. It is likely that a peaceful Libya would see a reduction in arms and human trafficking, potentially leading to more stability in the Sahel region.

The Libyan economy has been battered by the conflict, the COVID-19 pandemic, and Russia's invasion of Ukraine. The country’s fragility is having far-reaching economic and social impact. GDP per capita declined by 50 percent between 2011 and 2020 while it could have increased by 68 percent if the economy had followed its pre-conflict trend. This suggests that Libya’s income per capita could have been 118 percent higher without the conflict. Economic growth in 2022 remained low and volatile due to conflict-related disruptions in oil production. World Bank staff estimates that in 2022 the Libyan economy contracted by 1.2 percent due to a blockade of oil production during the first semester. The labor market is characterized by high unemployment, with an official rate of 19.6 percent. More than 85 percent of those who work are employed in the public and informal sectors. Fiscal revenues increased by 16 percent in 2022, driven by higher oil earnings which account for 97 percent of fiscal revenues. Public debt, mainly domestic, is high at 77 percent of GDP and 126 percent of government revenue. It is sustainable assuming hydrocarbon production and exports are not further impacted by security or conflict measures. The increase in current spending is expected to be sustained in 2023, partly because of the adoption of the wage unification law in November 2022. Additionally, the GNU registered a fiscal surplus of 2.5 percent of GDP in 2022, compared to 10.6 percent of GDP in 2021, despite a significant increase of hydrocarbon revenue.

Despite the numerous challenges facing the country, the Libyan economy could be reconstructed and diversified by leveraging its substantial financial resources, building on four critical pillars. The first is reaching a sustainable political agreement on the future of Libya. The second is the preparation of a shared vision of economic and social development that is based on accurate assessments of needs and aspirations. The third is the development of a modern and decentralized public financial management system that ensures adequate sharing of oil wealth and inter-governmental fiscal transfers as well as effective and transparent budget planning, execution and reporting policies. The fourth is the establishment of a modern and comprehensive social policy that enables the reform of the public administration and creates a clear distinction between social transfers and public wages.

In 2022, the humanitarian situation improved, but vulnerabilities still exist. The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) reported that the number of people who require targeted humanitarian assistance is expected to decrease by 58 percent in 2023, yet remains significant at 4 percent of the population. Needs are greater among internally displaced persons, with health care, education, transport, and shelter as priority needs.

Last Updated: Apr 04, 2023


Libya: Commitments by Fiscal Year (in millions of dollars)*

The World Bank does not have any recent lending to Libya. Please view the full Lending Portfolio

*Amounts include IBRD and IDA commitments
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Ebrahim Al-Harazi
+1 (202) 855 1565