São Paulo – Libya returned to growth in 2012 and the political and economic situation is being improved after the ousting of Muammar Kadafi, but there is still much to be done for sustained economic growth in coming years. This is the main evaluation made by International Monetary Fund (IMF) technicians in a press statement disclosed on Friday (8), one day after a delegation by the institution concluded a visit to the North African country.
According to the press statement, Libyan economic growth “exceeded 100%” in 2012, as against the previous year, reflecting its great recovery after the economic and political collapse in 2011. The oil and oil product sector, the main productive activity in the country, is recovering and should return to the levels prior to Khadafi’s ousting. The non-oil sector should grow on average 15% a year from 2013 to 2018. Inflation dropped in 2012 and ended the year at 6%. Furthermore, according to the IMF, in 2012 the Libyan inflow of foreign currency grew 11.5%.
Despite these signs of recovery and economic growth, the country has significant challenges ahead. In the short run, according to the Fund statement, Libya needs to continue promoting its political transition, guaranteeing public safety, maintaining budget balance, creating legal safety and offering trustworthy economic information.
The leader of the delegation, Ralph Chemi, stated that there are further challenges in the medium run, like, for example, development of a financial market, to improve and make management of natural resources and foreign investment flow more transparent. The organisation also stated that the country needs to reduce dependence on hydrocarbons through economic growth guided by the private sector.
The IMF statement shows that depending on oil revenues, the Libyan economy becomes vulnerable to lower commodity prices and, consequently, on its revenues. The organisation also says that the need to rebuild the country’s infrastructure may affect budget balance.
*Translated by Mark Ament
