However, late in the Petroleum Law was amended in accordance with the agreement worked out between the major oil companies and the Organization of Petroleum Exporting Countries OPEC.
Furthermore, the computation of profits was to be based on posted prices and not on realized prices. During the past five years Libya has emerged as a leading oil producing country. Crude oil exports have risen from 5 million barrels in to million barrels in ; in that year Libya ranked fifth among the oil producing countries in the Middle East and North Africa and attained the largest expansion in output, 41 per cent.
With major fresh discoveries still being made exports will continue to rise although probably at a slower rate. Of the other sources of exchange receipts mentioned in Table 1 , only export receipts declined sharply after The decline up to was caused mainly by the fall in agricultural production resulting from the drought, and thereafter by the fact that goods that might once have been exported were now consumed locally.
As a result of these rising receipts of foreign exchange, Libya has had balance of payments surpluses—that is, has gained foreign exchange reserves—almost without interruption in every year since gaining its independence in Payments for imports and invisibles e.
As Table 2 indicates, imports of the domestic economy i. Furthermore, along with the rise in imports, their composition also changed after Imports of food items as a proportion of total imports fell sharply between and , while imports of manufactures increased. The government payments include, in addition to consular expenditures, some imports under foreign aid projects. The total doubled between and and accounted for nearly one half of all current payments in other than for imports.
Although there has been some outflow on account of emigrating Italians, a small net inflow has been recorded in recent years.
Libya has virtually no external liabilities. Between and , the total holdings of money, savings, and time deposits by the public in Libya increased by per cent; in the amount of liquidity increased by about half. Government deposits with the banks also rose in this period. The banks also increased credit to the private sector—individuals and businesses—in this period, but less sharply.
See Table 3. Government deposits with the banks increased in all years except in and The increase in government deposits between and was due to sustained budget surpluses derived from expanding public revenues. Customs receipts, in particular, rose in this period as imports expanded. The rapid income expansion has led to a steep rise in wages and the cost of living; in and the minimum wage of government workers rose by 70 per cent. The cost of living index in Tripoli has not risen as sharply as elsewhere in Libya, but until this index did not give a very accurate idea of the expenditures of a working family.
A revised index that is now being published shows an increase of 7 per cent in the cost of living during each of and As a result of the wage rise, there has been a steady movement of labor from the farms to the towns. Although farm production does not seem as yet to have been set back by this movement, the strain is showing nonetheless; in the towns, housing is very short, and the community services are overworked.
Land speculation has also risen. During the years the Government received its first royalties from oil exports but, as it adjusted the salaries of public servants to the rising cost of living and generally added to its services, expenditures rose faster than revenues even with this important addition. In the Government began to receive taxes in addition to royalties from oil operations.
This was a turning point, and since revenue has outrun expenditure, so that budget surpluses have accumulated. However, in revenues and expenditures were almost in balance as expenditures, particularly for development, had risen sharply. But the actual rate of spending was much below the estimate because of administrative problems and lack of skilled manpower. However, since development expenditures have risen sharply, more than doubling during each of the past two fiscal years.
Construction projects of one sort or another account for more than two thirds of total expenditures on development. Bank credit to the private sector expanded continuously, but not evenly, in the period The rate of expansion slowed down during and but accelerated again in the following two years. The credit granted has been used mainly to finance imports and domestic trade, but recently more of it has gone into construction activity.
Previously, the commercial banks were either totally or partially foreign owned, with the exception of the Bank of Libya formerly the National Bank of Libya.
But in the recent past the policy of Libyanization of the banking sector has met with considerable success as some commercial banks, previously foreign-owned, acquired Libyan majority participation. The Bank of Libya did not exercise much control over the credit activities of the commercial banks before , largely because its legal authority was inadequate.
Since this law was enacted, the Bank has introduced measures requiring the commercial banks to maintain minimum reserves against their time and savings deposits and against their demand deposits. The Bank has also acted to reduce the spread between the rate of interest allowed on deposits and that charged on loans. A primary objective of the Bank of Libya is to improve the banking habits of the community.
To this end, the Bank intends to increase the number of its own branches in Libya, and to sponsor the establishment of banks with joint Libyan and foreign partnership. Although substantial progress has already been achieved, in Libya the development effort is still hindered by the scarcity of skilled manpower and of economic resources other than oil.
I read with great interest Mr. This article covers in a few pages a number of most important subjects. Few continental bankers and few of their borrowing clients would agree.
I think that such issues are if anything more costly to the borrower than comparable issues managed by continental banks. All Rights Reserved. Topics Business and Economics.
Banks and Banking. Corporate Finance. Corporate Governance. Corporate Taxation. Economic Development. Economic Theory. Economics: General. Environmental Economics. Exports and Imports. Finance: General. Financial Risk Management. Foreign Exchange. Industries: Automobile. Industries: Energy.
Industries: Fashion and Textile. Industries: Financial Services. Industries: Food. Industries: General. Industries: Hospital,Travel and Tourism. Industries: Information Technololgy. Industries: Manufacturing. Industries: Service. Information Management. International Economics. International Taxation.
Investments: Bonds. Investments: Commodities. Investments: Derivatives. Investments: Energy. Investments: Futures. Investments: General. Investments: Metals. In , on the eve of independence, Libya, underdeveloped and backward, was characterized by the United Nations UN as perhaps the world's poorest country. Experts predicted that the country would have to be supported for years by international grants-in-aid while it organized itself to try to live within its own meager means.
Although Libya suffered few balance-of- payments problems, it was beginning to be bothered by inflation. The country seemed to have adequate funds at its disposal, however. For more recent information about the economy, see Facts about Libya. Custom Search Source: U. Positive Economic Developments, yet institutional challenges persist. Oil production has recovered to levels 1. The authorities also initiated efforts to reunify competing public institutions in the east and west of the country, but significant challenges remain.
A financial review of the Central Bank in Tripoli and the Bayda branch has been finalized; the next steps require political agreement on unification under a single decision-making authority, in addition to unifying balance sheets, policy making, regulatory and supervision processes, and operations.
Efforts to approve a unified budget, the first since , have been protracted, with multiple drafts submitted by the GNU and rejected by the House of Representatives since March Following the lifting of the oil blockade in late and the resilience of global oil prices, hydrocarbon export receipts and in turn the trade balance and current account balance are on an upward swing.
With the abolishment of the foreign exchange tax in January , the gap between the official and parallel market exchange rates have narrowed significantly.
While the devaluation has improved macro-economic stability the adverse impact on purchasing power has been felt throughout the population, particularly affecting the poor.
Should the political process progress positively and the security situation remain stable, Libya will continue its path of economic recovery. If the current rapprochement remains on track, with presidential and parliamentary elections successfully moving forward in a peaceful manner, and oil production persisting, Libya is forecasted to record a GDP growth rate of over 70 percent in The fiscal balance could record a surplus given the strong rebound in oil production and exports and following the devaluation of the currency which has reduced the cost of financing public sector salaries and goods and services using dollar-denominated oil revenues.
Libya At-A-Glance. Learn more. Research View All Research. Doing Business in Libya. Labor market dynamics in Libya : reintegration for recovery. The quest for subsidy reforms in Libya.
Labor market dynamics in Libya : Reintegration for recovery. Jesko Hentschel. Henriette von Kaltenborn-Stachau. View All Experts.
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