The National newspaper reported on Monday that Libya has recently raised its oil production to around 1.4 million barrels per day and revised its targets to further increase output in the coming years. However, its economy continues to suffer from multiple problems, including the absence of a unified government capable of making political decisions to stimulate growth instead of corruption at the highest levels, as well as unregulated spending outside the permitted framework that is not recorded by the Central Bank of Libya.
According to the newspaper, the volatile security situation and the lack of a clear strategy have significantly affected efforts to diversify the economy away from oil. Oil and gas currently account for nearly 95% of exports and government revenues, in the absence of any strategy to reduce reliance on hydrocarbons.
The newspaper added that the government spends vast sums on subsidies and public sector salaries.
Analysts told The National that the lack of investment in launching new infrastructure projects is also hindering growth.
François Conradie, Senior Political Economist at Oxford Economics Africa, told The National: “Libya’s economy does not look good. There is a lot of corruption linked to the two governments, and this is leading to a dangerous fiscal slide.”
The newspaper explained that in 2025, Libya’s total revenues reached 136.9 billion Libyan dinars ($21.7 billion), including 99.6 billion dinars from oil revenues and 17.2 billion dinars also from oil-related revenues. Total expenditures during the same period amounted to 136.8 billion dinars, including 73.3 billion dinars for salaries and 34.5 billion dinars for subsidies, according to data from the Central Bank of Libya.
Antonius Tsaleikis, Country Risk Analyst at BMI Research, part of the Fitch Group, said: “The main driver of the deterioration in Libya’s macroeconomic situation is that the country operates under rival governments, lacks a unified national budget, and has high public spending in an environment of low oil prices and production disruptions.”
Tsaleikis added that unregulated spending in 2024 exceeded 50 billion dinars, while official spending amounted to around 120 billion dinars, resulting in a large deficit exceeding 20% of GDP, based on BMI estimates and IMF data.
The newspaper continued by noting that the conflict following the overthrow of the Gaddafi regime caused damage to infrastructure, including Tripoli International Airport.
Tsaleikis said that around 85% of Libya’s expenditures are also directed toward salaries and subsidies, while only 15% is allocated to investment, “which is insufficient to fund infrastructure projects, reconstruction, and support non-oil economic growth, despite Libya—an OPEC member—earning billions of dollars from oil sales.”
The unstable security situation and the absence of a clear strategy to diversify the economy away from oil continue to affect the country’s growth, with oil and gas accounting for nearly 95% of exports and government revenues, in the absence of any plan to reduce dependence on hydrocarbons.
The government also spends large sums on subsidies and public sector wages. Analysts told The National that the lack of investment in new infrastructure projects further constrains growth.
Currency Devaluation
Libya has taken several measures in recent years to support economic growth, including devaluing its currency.
The newspaper reported that the Central Bank of Libya devalued the Libyan dinar by 14.7%, bringing the exchange rate to 6.3759 per US dollar, citing the political and economic turmoil facing the country. This marked the second currency adjustment in less than a year.
Samir Tallouh, Chief Economist at S&P Global Market Intelligence, said: “Libya’s growth outlook could benefit from an improvement in the security situation, which would unify the state budget under a single government, improve oversight and control fiscal spending, and reduce the risk of disruptions to Libyan oil production,” according to the newspaper.
