The International Monetary Fund (IMF), following a visit by its expert team to Tunis between November 10 and 14, issued a warning regarding mounting economic risks confronting Libya.
The Fund stated that Libya’s economic outlook is clouded by “considerable uncertainty,” with risks skewed towards negative developments. It identified the main cause of the widening fiscal deficit and increased pressure on public finances and the current account as the persistence of high public expenditure concurrent with the decline in global oil prices.
The IMF confirmed that political division and the delay in adopting a unified budget have directly contributed to ongoing “unconstrai ned” spending, which is placing increased pressure on the Central Bank’s reserves and the exchange rate. Consequently, the Fund urged Libyan authorities to agree on a disciplined, unified budget as an urgent priority.
Although the Central Bank has taken steps to regulate the foreign exchange market—such as injecting hard currency, raising reserve ratios, and issuing investment instruments—the Fund warned that the greatest challenge to monetary policy remains the absence of stringent spending controls. Despite this, the Central Bank’s reserve levels remain “comfortable” and the official inflation rate is low.
The Fund emphasised the importance of comprehensive spending reform, reforming the subsidy system, and expanding the “Your Salary Instantly” platform to serve as the primary channel for wage payments. It also called for the adoption of a transparent, multi-year investment plan.