The International Monetary Fund (IMF) said that Libya's gross domestic product recorded growth of 10% last year, largely due to the recovery after the cessation of oil production in 2022. IMF expected that the gross domestic product would grow to 8% in 2024, in the final statement of the IMF experts after discussions that lasted 10 days, on Article 4 for the year 2024, with the Central Bank, the Audit Bureau, the National Oil Corporation, and a number of concerned financial authorities.
The International Monetary Fund also expected oil production to reach 1.5 million barrels per day by 2026, explaining that 2023 witnessed a financial expansion and a decline in government revenues, despite the simultaneous increase in oil production.
While the IMF welcomed the recent steps to withdraw banknotes at risk from circulation, in reference to the decision to withdraw the 50 dinar banknotes, it alerted to the need for the Central Bank to maintain the safety of means of payment. The IMF indicated the possibility of amending the temporary tax on the foreign exchange rate - if necessary - imposed by the Central Bank at a rate of 27% on all foreign exchange purchases in early 2024.
IMF called on the authorities to address the fundamental pressures on the exchange rate, and the need for the central bank to maintain the efficient performance of the foreign exchange market because the exchange rate is the main pillar of the overall economy, in the absence of other political tools. It explained that the Central Bank maintained a “comfortably” high level of reserves, anticipating a decline in the current account surplus and public and external financial balances over the coming years in line with the decline in oil prices.
It called for the unification of accounting procedures and the integration of the payment system - in light of the unification of the central bank - to limit cash financing by the eastern branch of the bank, to relieve pressure on the exchange rate and on the liquidity of the banking sector and to facilitate policy coordination. It urged for structural reform efforts to focus on strengthening institutions and the rule of law, developing a clear economic vision for the country, and developing a plan to increase development spending to alleviate growth challenges and reduce public finance costs associated with high spending on public sector wages and support.
The IMF recommended adopting a long-term economic strategy aimed at diversifying resources away from oil and gas and promoting stronger and more comprehensive growth led by the private sector. The IMF stressed the need to rearrange spending priorities to enhance growth and efficiency, support intergenerational justice, and diversify sources of revenues away from oil.
The IMF expected that the 2025 Article IV consultations would conduct a comprehensive review of governance, anti-corruption, and the rule of law, stressing the continued provision of assistance in the field of capacity development. It called on the authorities to take advantage of Libya's comparative advantages (location, land area, natural resources, and access to energy and labor) to promote the development of non-oil economic activity that requires labor-intensive activity.
