Libya’s public debt has reached high levels, which amounted to 70.4 percent of GDP in 2022, also equivalent to 126 percent of government revenue, according to the World Bank’s economic update in April.
In its report titled ‘Altered Destinies: The Long-Term Effects of Rising Prices and Food Insecurity in the Middle East and North Africa’, the World Bank stated that high public debt is can be only be considered sustainable Libya continued hydrocarbon production at current levels.
“Total public spending increased by 49 percent, includ ing 53 percent increase in public wages,” the international financial institution reports. “By the end of 2022, inflation […] showed signs of moderation, although remaining elevated and mainly driven by the in-creases in food and housing prices, as well as electricity costs.”
The World Bank explained that the official inflation rate in Libya only captures price developments in Tripoli, and reached 4 percent by end-2022.
“The Minimum Expenditure Basket (MEB) indicates that prices peaked at 38.7 percent (year-on-year) in April 2022, to then hover around 20.7 percent by the end of the year.”
The World Bank refrained from producing quantitative growth and macro forecasts “due to the high degree of uncertainty and fragility that characterizes Libya”.
“Downside risks to the outlook remain elevated,” it said. “Political tensions and competition between the rival governments will likely continue to impact the good funtioning of state institutions, thus impeding the ability to deliver public services.”
“A protracted global economic deceleration would reduce global oil demand, thereby translating into reduced exports and government revenues for Libya, with knock-on effects on economic growth, fiscal and current account balances, as well as foreign reserves,” the World Bank concludes.