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Tag: revenues

Oil Price: Collapse in Libyan Oil Revenues Pushes Dinar Toward Freefall

Written by Amira Cherni on . Posted in News. No Comments on Oil Price: Collapse in Libyan Oil Revenues Pushes Dinar Toward Freefall

The oil-focused website Oil Price reported on Tuesday that the Libyan dinar has dropped to its lowest level ever, driven by a sharp decline in oil revenues and escalating political unrest. The Central Bank of Libya devalued the currency by 13.3% on April 6, setting the official exchange rate at 5.5677 dinars per US dollar in its first move since 2020. However, the black market rate soared to over 7.20 dinars per dollar, reflecting deepening economic instability.

According to the website, the devaluation drew criticism from key government entities. The Presidential Council and the High Council of State believe the move exacerbates Libya’s financial crisis and weakens citizens’ purchasing power. They pointed to the absence of a unified national budget and the proliferation of parallel spending bodies as major contributors to the crisis. These criticisms could ignite further unrest as rivalry continues between the two dominant tribal factions vying for control over institutions in eastern and western Libya.

The website also noted that in the meantime, political factions in eastern Libya shut down major oil fields in protest over disputes within the central bank, further shrinking oil exports — the country’s main source of foreign currency.

The Central Bank reported that public debt has now reached 270 billion dinars, with projections suggesting it could surpass 330 billion dinars by year’s end unless urgent financial reforms are implemented.

The report concluded by stating that while international observers are calling for political reconciliation and robust economic reform, Libyan officials face mounting pressure to restore market confidence and stabilize an economy teetering on the brink of a deeper crisis.

Exclusive: Al-Wahsh – “The Correct Short-Term Solution Is to Unify and Control Public Spending, Ensure Regular Foreign Revenues, and Avoid Deficit Financing”

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Economic expert Saber Al-Wahsh stated exclusively to our source: “Uncontrolled spending has driven the demand for foreign currency to $2.3 billion, while revenues amounted to only $778 million, resulting in a $4 billion deficit in just two and a half months.”

He added: “Based on the latest statement and the Monetary Policy Committee meeting, I believe the Central Bank will resort to adjusting the exchange rate, thinking it’s a solution, but it’s merely a temporary fix.”

He continued: “The correct short-term solution is to unify and control public spending, ensure regular foreign revenues, and avoid deficit financing under any circumstances—except for salaries.”

Exclusive: Al-Wahsh Comments on the Central Bank of Libya’s Statement

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Economic expert Saber Al-Wahsh exclusively told our source about the Central Bank of Libya’s recent statement, describing the figures in the report on revenues and expenditures from January 1, 2025, to February 28, 2025, as concerning.

He added that total foreign currency revenues amounted to 3.6 billion USD, while expenditures were 6.1 billion USD, resulting in a deficit of 2.5 billion USD. Despite total public expenditures being 8.4 billion LYD (about 1.5 billion USD), he questioned, “Where do these funds, chasing dollars, come from?”

Al-Wahsh further explained that nearly 3 billion USD of foreign currency was requested for personal purposes, most of it likely being sought for profit through selling it on the parallel market.

He concluded, “Where do these funds come from to request such a huge amount of hard currency on the parallel market? We don’t want to create noise over this publication, but this situation is unsustainable. I believe the Central Bank is worried, but it’s concealing its concerns in hopes of an improvement.”

With February Salaries Excluded and a Surplus Exceeding 9 Billion… The Central Bank Discloses Revenues and Expenditures

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The Central Bank of Libya has released its report on revenues and expenditures from the beginning of 2025 until February 28, revealing total revenues of 18 billion LYD and expenditures of 8.4 billion LYD.

Revenues include 14.0 billion LYD from oil sales, 3.7 billion LYD from oil royalties, 41.1 million LYD from taxes, 12.5 million LYD from customs, 26.2 million LYD from telecommunications, and 245.8 million LYD from local fuel sales and other sources.

Expenditures include 5.9 billion LYD for salaries (for January only, as February salaries were not recorded), 35 million LYD for operating expenses, 0 LYD for development, 2.5 billion LYD for subsidies, and 0 LYD for emergency expenses.

A Banker to Sada: “Revenues Are Being Transferred to the Central Bank Regularly… Here Are the Positive Indicators”

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Our exclusive source in the banking sector revealed: “We have received news that the efforts of the Governor of the Central Bank of Libya are gradually bearing fruit, with positive indicators continuing to rise.”

The source added: “The National Oil Corporation has started to respond and transfer oil revenues almost regularly. This will enhance the Central Bank’s ability to meet the increasing demand for foreign currency and manage the state budget with sufficient flexibility.”

He further stated: “In addition to this, the cessation of fuel swaps, which have burdened the state and carried many ambiguities and numerous questions regarding hidden corruption allegations, is another positive step.”

Ashnibish Writes: “The Libyan Economy – Reality and Challenges”

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In a recent article, Anas Ashnibish examined the state of the Libyan economy, describing it as a rentier economy that heavily relies on a single, finite resource—oil. This resource serves as the primary source of funding for the public budget and all economic sectors. Libya’s economy is among the least diversified in the region, particularly compared to neighboring countries and other oil-producing nations. Oil accounts for more than 65% of the gross domestic product (GDP) at current prices, while the economy is highly exposed to external markets, both in imports and exports.

Oil export revenues constitute about 97% of Libya’s total exports. At the same time, the country imports no less than 85% of its local market needs. The public sector is the primary source of employment, with nearly 3 million government employees—a staggering ratio compared to the total population, making it the highest globally. Moreover, the state plays a near-total role in providing infrastructure-related services, subsidies, and wages.

The inefficient allocation of economic resources, excessive consumption rates, and inequitable wealth distribution have led to the emergence of “disguised unemployment.” While the country has a high percentage of youth, it suffers from a limited skilled workforce due to the mismatch between educational outputs and labor market needs.

These characteristics of the Libyan economy have had negative repercussions on achieving local and sectoral development, particularly amid political and security instability. This instability further hampers efforts to support and advance the economy. Progress can only be achieved through economic policies grounded in transparency, anti-corruption efforts, and collaborative teamwork.

The unique features of the national economy have, in recent years, exacerbated the challenges it faces, especially in managing economic, financial, monetary, trade, and investment policies. The key challenges include:

  1. Delayed return to stability.
  2. Political and institutional division at all levels.
  3. Overreliance on oil revenues to fund economic activities.
  4. Severe inefficiencies in public financial management.
  5. Dominance of current expenditures over investment spending.
  6. High government subsidy costs.
  7. Lack of comprehensive and reliable data.

Independent: The Libyan Economy Between Declining Oil Revenues and Corruption

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The African Development Bank on Tuesday projected a growth rate of 6.2% for the Libyan economy in 2025, based on the National Oil Corporation’s goals, which anticipate exceeding a production level of 1.5 million barrels per day by the end of that year.

“Independent Arabia” reported that the Libyan economy experienced a difficult year due to fluctuations in oil production and a collapse in the third quarter of the current year caused by political disputes between rival authorities at the head of governance.

The newspaper confirmed that Libyan oil production has significantly improved in recent weeks, reaching 1.42 million barrels per day, the highest level in over a decade. This supports forecasts suggesting that the Libyan economy could recover and regain economic growth momentum next year, according to donor institutions.

Abu Snina: “No Stability for the Libyan Dinar Exchange Rate Without Oil Revenues”

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The economic expert, Mohamed Abu Snina, wrote an article stating:

In Brief, the focus of Libyan decision-makers, those shaping the current landscape and challenging authority, remains limited to finding short-term solutions to economic problems such as the exchange rate, public spending, liquidity, fuel subsidies, salaries, and oil production. These areas suffer from recurring distortions that merely reflect symptoms of the deeper issue plaguing the economy: the heavy reliance on crude oil export revenues, a rentier culture, and the resulting deadlock. This perpetuates a vicious cycle of dependency, sustaining a mono-economy with no clear vision for reform.

The salary bill inflates public expenditure, leading to exchange rate instability. Exchange rate instability puts pressure on reserves, which in turn restricts foreign currency use. This limitation reduces liquidity, increases the black-market exchange rate, and subsequently leads to a liquidity crisis. The public’s lack of trust in the banking sector worsens, increasing reliance on public expenditure. Allocating funds to develop the oil sector comes at the expense of other development projects. Thus, addressing any existing economic problem or distortion often exacerbates another, because the root cause is structural. There is no public spending or budget funding without oil revenues.

There can be no stability for the Libyan dinar exchange rate without oil revenues. No letters of credit for importing goods, supplies, and services can be issued without oil revenues. Salaries for approximately 2.8 million Libyans depend on oil revenues, as do fuel supplies for electricity and transportation. Fuel subsidies, which already strain the state’s budget, also rely on oil revenues. Even the development of the oil sector itself is unattainable without these revenues.

Decision-makers ignore the fact that oil is an exhaustible resource that may deplete within less than 25 years—a brief period in the lifespan of a state. Additionally, oil is losing market share to clean and alternative energy sources in the medium term, a reality given little attention. Oil prices are on a downward trend, and the exploitation of oil revenues fails to consider the rights of future generations, regional development needs, or the global climate crisis.

Why have successive governments failed to create and implement a serious strategy for economic diversification? Instead, they merely extinguish recurring crises. The Libyan Sovereign Wealth Fund, valued at over $60 billion, has yet to contribute to financing the state’s budget deficit, contrary to its foundational goals. Meanwhile, Libya’s other natural resources remain unutilized and ignored due to the prevailing conditions. Exploiting these resources requires investing oil revenues strategically, but those revenues are barely sufficient to cover salary bills.

There is no choice, priority, or alternative—before it is too late—to save Libya’s economy, the state’s future, and the coming generations other than by diversifying income sources, restructuring the national economy, halting the expansion of consumer spending and subsidies, breaking oil’s dominance over the economy, and reforming institutions while combating corruption—all within a defined timeframe.