Written by the Head of the Accounting Department at the Libyan Academy, “Abubakr Abu Al-Qasim”.
Recent news has reported the signing of an agreement to unify development spending among the parties in the Libyan landscape, a step that, in principle, represents a long-awaited positive development—especially in light of financial division and the structural imbalances it has caused in the management of public resources.
In this context, one cannot overlook the pivotal role played by the Central Bank of Libya and its Board of Directors, supported by effective international pressure, in sponsoring this agreement after negotiation rounds that lasted more than a year. This reflects a growing awareness of the importance of unifying financial decision-making as a key entry point for addressing economic distortions and restoring a degree of stability.
From a theoretical perspective, full commitment to the terms of this agreement could achieve several positive outcomes, most notably curbing uncontrolled public spending, improving the efficiency of resource allocation, which would gradually be reflected in exchange rate stability, strengthening the Libyan dinar, improving citizens’ purchasing power, and supporting the path toward financial stability.
However, this optimism—despite being well-founded—should remain accompanied by a high degree of caution. Past experiences show that the real challenge lies not in signing agreements, but in ensuring their actual implementation and sustainability. Therefore, the success of this agreement requires it to be complemented by a set of supporting measures, most importantly:
First: Strengthening the governance of public revenues, particularly oil revenues, to ensure transparency in collection and allocation, fairness in distribution, and subjecting them to strict oversight mechanisms.
Second: Subjecting development spending to institutional oversight by activating the role of supervisory bodies within the legal frameworks, in order to reduce waste and enhance spending efficiency.
Third: Adhering to the principle of fiscal sustainability by aligning spending levels with actual revenues and avoiding deficit financing methods that could exacerbate monetary imbalances.
Fourth: Achieving coherence among economic policies, particularly between fiscal, monetary, and broader economic policies, to ensure a consistent direction for the national economy and enhance the effectiveness of reform tools.
Commitment to these pillars would strengthen the chances of success for the unified spending agreement and translate its positive effects—even in the short term—into tangible indicators on the path to economic recovery.
In conclusion, hope remains that this step will mark the beginning of a serious path toward comprehensive economic reform that achieves financial stability and sustainable development for Libya, and restores confidence in its economic institutions. We pray for our country’s security, stability, and prosperity.
