Last updated: 23 May, 2013

Libya economy surges following revolution

Libya’s economy surged 105 percent in 2012 and should grow 20.2 percent this year, as it continues recovering from the meltdown that accompanied the uprising that ousted Moamer Kadhafi, the IMF said on Thursday.

The International Monetary Fund said in its latest assessment of the oil-rich North African country’s prospects that, while the “political situation is normalising, the government lacks control over parts of the country.

“While the new government brings together various interest groups, it continues to face a fragmented political landscape and tribal power struggles, which complicate the writing of a new constitution and efforts to reestablish security and the rule of law.”

These “lingering political and security uncertainties and a pronounced vulnerability to oil price fluctuations add to the significant challenges faced by the transition,” the IMF said, encouraging authorities to move rapidly in the implementation of their reform programme.

Oil and gas account for more than 80 percent of GNP in the North African country and up to 97 percent of its export revenues.

The IMF noted that, after plunging 72 percent in 2011, during the uprising against Kadhafi, hydrocarbon output skyrocketed by 211 percent in 2012 and should grow nearly 17 percent this year.

It said hydrocarbon exports should increase by 63 percent this year.

On the domestic front, inflation should settle to 2 percent in 2013 from 6.1 percent last year and 15.9 percent in 2011.

It also highlighted a decision by the General National Council in January to ban interest on financial transactions, with companies and state entities to be prohibited from paying and receiving interest from the beginning of 2015.

As this would preclude conventional bank lending, the IMF recommended that “authorities consider delaying the implementation of the new law until the financial sector is able to comply with it.”