Husni Bey: Reforming Libya’s Economy Starts at the Root of the Problem, Not with Its Symptoms; Numbers First, Beyond Emotion and Populism

By Libyan businessman Husni Bey

In an article, Libyan businessman Husni Bey wrote:

The economy does not wait for political decisions, nor is it governed by wishes or administrative decrees. It is governed by the laws of supply and demand, revenues and expenditure, production and financing. Regardless of disagreements over the accuracy of the figures, what matters most is the economic mechanisms and rules, not slogans or populist rhetoric.

First: Let Us Stop Treating Symptoms and Confront the Causes

Theft, speculation, the gap between exchange rates, rising demand for dollars, the parallel market, and fuel smuggling are all symptoms and imbalances fueled by the existing economic model. Combating them is necessary, but it will not address the roots of the crisis unless the incentives that produce them are changed.

Second: Where Is Libya’s Money Being Spent?

According to my estimates, Libya’s public expenditure exceeded approximately LYD 270 billion in 2025, distributed as follows:

These are estimates that need to be reconciled with the actual accounts. Nevertheless, they clearly reveal the scale of the problem and the priorities for reform.

Fuel and energy alone account for 40% of expenditure, salaries for 28%, and development and related spending for 20%. Together, these three categories consume approximately 88% of total public expenditure.

Does it make sense to focus on speculators while ignoring the spending structure that generates demand for dollars and finances these imbalances?

Third: The Dinar’s Strength Cannot Be Measured by Foreign Reserves Alone

There is no direct relationship or automatic guarantee that the dinar will be strong simply because the country holds substantial foreign-exchange reserves. Reserves provide the capacity to intervene in and defend the currency, but they cannot compensate for persistent fiscal and monetary imbalances.

The sustainability of the dinar’s value is determined primarily by public revenue, public expenditure, how deficits are financed, money supply growth, and genuine demand for foreign currency.

In an economy where approximately 93% of public revenue comes from oil and gas denominated in dollars, while most expenditure is paid in dinars, the exchange rate used to convert dollar revenues into dinars becomes a decisive variable in the fiscal balance.

Correcting the exchange rate, when the dinar is overvalued, is therefore an essential tool for restoring balance. However, it is not a substitute for controlling expenditure and implementing structural reform.

Fourth: How Can We Establish the True Level of Public Spending?

It is not enough to look at the announced budget. A unified fiscal and monetary account must be prepared to reconcile oil and non-oil revenues, foreign-currency flows, changes in reserves, monetary base growth, and off-budget liabilities and financing, while preventing double-counting of flows between the Treasury and the Central Bank.

This reconciliation would reveal actual expenditure and its sources of financing, rather than relying solely on officially announced administrative figures.

Fifth: Where Should Reform Begin?

The numbers—not emotions—should determine priorities.

Fuel and energy — LYD 108 billion: Reform the subsidy, supply, and distribution systems, gradually replace commodity subsidies with direct and equitable cash compensation for citizens, and eliminate waste and smuggling.

Salaries — LYD 76 billion: Control recruitment and duplicate employment, and link wages to productivity and actual service delivery, without arbitrarily infringing on employees’ rights.

Development and parallel expenditure — LYD 54 billion: Bring all commitments under a unified Treasury, link disbursements to measurable projects with economic returns, and prevent spending outside oversight.

Exchange rate and financing: Adopt an exchange rate closer to economic equilibrium, unify the foreign-exchange market, and stop the uncontrolled monetary financing of deficits, while protecting low-income groups.

Conclusion

Libya’s fundamental problem is not a lack of resources, but rather the mismanagement, distribution, pricing, and financing of those resources and public expenditure.

An administratively maintained strong dinar cannot be defended amid uncontrolled spending. The parallel market cannot be eliminated through prohibitions, nor can smuggling be stopped through penalties alone as long as price gaps continue to create extraordinary profits.

Reform must begin with the largest expenditure categories and the correction of exchange rates and economic incentives—not with chasing the consequences while ignoring the causes.

The economy does not accommodate governments, respect slogans, or wait for political consensus. Either we respect its rules, or we continue to pay the price for ignoring them through the erosion of the dinar’s value, declining purchasing power, and the loss of future generations’ prospects.