An economic report, published by the English section of South Africa’s “Channel Africa” radio network, conveyed warnings from the International Monetary Fund (IMF). These warnings concern Libya’s financial trajectory. The report emphasized that persistent financial imbalances, despite oil revenues, pose growing risks to macroeconomic stability. This follows the 2026 Article IV consultations.
An IMF mission, led by Stephanie Eble, held discussions with Libyan authorities in Tunisia. These talks occurred from March 30 to April 8. The mission concluded with a statement. It warned against the continuation of a large fiscal deficit. The IMF believes this deficit increases pressure on the exchange rate, foreign reserves, and inflation. Urgent fiscal adjustment is therefore deemed essential.
The statement indicated that rising oil prices present both an opportunity and a risk. Using temporary revenues to expand spending will increase vulnerabilities. This would make future adjustments more difficult when prices return to normal levels. The Fund urged authorities to save oil revenues. This saving is for rebuilding reserves. It also called for accelerating long-delayed reforms.
The statement highlighted that a lack of effective fiscal discipline makes current policies increasingly hard to maintain. Continued reliance on currency devaluation, administrative controls, and drawing down reserves will prolong high inflation. It will also distort markets and weaken private sector activity. The IMF predicted continued short-term growth, supported by fiscal spending. However, it warned that reserves could fall to critical levels in the medium term. This would happen if policy adjustments are not made.
The statement added that risks are strongly skewed to the downside. These risks include potential disruptions to oil production, declining prices, and increased spending. It considered fiscal policy the primary source of current imbalances. The IMF called for strengthening non-oil revenue mobilization. It also urged rationalizing expenditure and establishing reliable budget frameworks.
Energy subsidies, estimated at about 20% of GDP, were described as among the highest globally. The public sector wage bill, approaching 30% of GDP, also ranks among the highest. Both necessitate reforms. More targeted social protection programs are also needed.
The Fund reiterated its stance on monetary policy. It believes exchange rate adjustment could help address some distortions. However, this cannot substitute for fiscal discipline. It called for strengthening the independence, transparency, and tools of the Central Bank of Libya. The IMF also urged progress in governance reforms. It recommended stronger anti-corruption measures. Improving the business environment and advancing anti-money laundering standards are also vital. Building capacity remains essential for sustainable reform.