Economic expert Abubakr Abu Al-Qasim said in an exclusive statement to our source that Libya’s economy, amid the imbalances of 2025 and the continuation of institutional division into 2026, entered 2025 under mounting pressure. The most prominent challenges include the widening public budget deficit and the persistence of balance-of-payments distortions, in the context of high and uncontrolled public spending and weak collection of public revenues, including from the oil sector. He added that corruption has come to afflict all aspects of economic life, alongside poor performance by oversight institutions—conditions that have directly affected citizens’ lives by fueling higher inflation and eroding purchasing power.
He continued: meanwhile, the Libyan dinar has faced sustained pressure against foreign currencies, driven by increased demand for foreign exchange to finance imports and declining confidence in economic policies. This has led to higher prices for the dollar and other currencies in the market, raising the cost of basic goods and services. With limited tools available to address these challenges, the citizen has become the weakest link in the equation of fiscal and monetary imbalances.
These challenges are further compounded by ongoing institutional fragmentation and the multiplicity of decision-making centers, which weakens coordination between fiscal and monetary policies and delays the adoption of genuine reforms to address both fiscal and monetary deficits—costs that citizens ultimately bear through inflation. As 2026 approaches, serious questions arise about the Libyan economy’s ability to curb inflation, protect the value of the national currency, and restore a minimum level of economic and living stability. In the short term, he said, this requires concerted efforts to implement urgent measures, most notably:
- Curbing runaway spending and reaching consensus on a single, nationwide budget law within ceilings aligned to available revenues.
- Strengthening governance of public revenues, especially in the oil sector.
- Activating oversight bodies to play their role in combating pervasive corruption.
- Creating harmony among economic policies across their three pillars—trade, fiscal, and monetary.
- Reforming fuel subsidies, which drain more than 30% of the budget.
Abu Al-Qasim concluded by warning that continuing financial and economic mismanagement—as seen in 2025 and the years before—will inevitably worsen conditions in 2026, with citizens once again paying the price, as they have in the past.
