Professor of Finance and founder of the Libyan capital market, Suleiman Al-Shuhoumi, wrote in a post:<\/p>\n\n\n\n
The Central Bank of Libya supervised the signing of an agreement between representatives of the Libyan High Council of State and the House of Representatives. This step appears, on the surface, to be a serious attempt to contain one of the most critical issues of Libyan division\u2014public spending and the distribution of its resources. It seems that this move came after dialogue between the various parties, under external sponsorship, in which the US envoy Boulos played a visible role in narrowing differences and pushing the parties toward a temporary understanding that would ease tensions over public funds.<\/p>\n\n\n\n
According to circulating information, this process resulted in an agreement related to the development spending chapter\u2014the segment that has long been one of the main points of contention between competing institutions. Discussions suggest allocating around 40 billion dinars for this purpose, to be distributed across different regions of the country. On the surface, this agreement may appear to be a positive step carrying some optimism, and indeed the parallel foreign exchange market reacted with a clear signal of goodwill, reflected in a relative decline in the US dollar rate, as if market actors were giving this initiative an initial test of confidence.<\/p>\n\n\n\n
However, a closer reading of this development reveals that the matter is far deeper than a simple agreement on a figure or a spending item. The real question is not whether the parties agreed on dividing expenditures, but rather: what is the nature of this agreement itself? Are we witnessing a temporary political settlement between power centers sharing public resources under the label of \u201cdevelopment\u201d? Or is this the beginning of a genuine transition toward building a unified national budget based on clear rules for revenue estimation, prioritization of spending, fiscal discipline, and institutional oversight?<\/p>\n\n\n\n
Here lies the core issue, because the difference between a revenue-sharing arrangement and a national budget is not semantic\u2014it reflects two fundamentally different logics of state management. A sharing agreement is based on political appeasement and distribution of quotas among parties, often aiming to contain conflict rather than build stability. A national budget, on the other hand, is a sovereign and legal instrument for managing resources and expenditures under a unified national vision, based on realistic estimates and subject to transparency, discipline, and accountability.<\/p>\n\n\n\n
If reports are accurate that total planned spending may reach around 180 billion dinars to cover various public expenditure chapters, then we are facing an extremely large figure that raises serious questions. In Libya\u2019s current economic structure, such a level of spending cannot simply be seen as normal expansion. It may instead indicate excessive fiscal expansion not necessarily grounded in conservative revenue estimates or a prudent risk-management strategy.<\/p>\n\n\n\n
These concerns deepen when considering Libya\u2019s rentier economic structure, which heavily depends on oil revenues. Despite providing significant financial inflows, oil remains an unstable source, subject to global market volatility, geopolitical factors, and internal disruptions that can halt production or exports at any time. Therefore, building a high spending level on temporary price surges or exceptional inflows linked to global crises could be a highly risky fiscal approach unless accompanied by clear hedging strategies, adequate reserve accumulation, and realistic contingency planning.<\/p>\n\n\n\n
In this context, it is legitimate to ask: has the recent rise in oil revenues been used to build a fiscal safety buffer for the state? Has part of these revenues been allocated to strengthening foreign exchange reserves? Has a plan been put in place to reduce accumulated public debt? Or has most of it been directed toward expanding both recurrent and development spending without sufficient guarantees of sustainability?<\/p>\n\n\n\n
The greatest risk here is not only the size of the figure, but the environment in which it will be spent. Libya still suffers from deep institutional fragility, dual decision-making structures, weak oversight and accountability systems, and chronic imbalances between financial, executive, and legislative authorities. In such a context, large spending expansions can easily shift from being tools for development and reconstruction into mechanisms for reproducing rent distribution and reinforcing patronage networks, thereby entrenching a logic of resource-sharing rather than state-building.<\/p>\n\n\n\n
Development is not measured merely by the volume of allocated funds, but by institutions\u2019 ability to direct these funds efficiently, fairly, and transparently. Libya\u2019s past experience has shown that allocating large sums without strong planning, monitoring, and oversight does not necessarily lead to real development. Instead, it may result in inflated contracts, duplicated projects, leakage of funds, and growing perceptions of inequality across regions and social groups. Therefore, speaking of \u201cdevelopment spending\u201d alone is not sufficient to reassure the public or the markets unless it is accompanied by a clear framework defining priorities, implementation mechanisms, distribution criteria, and monitoring and evaluation tools.<\/p>\n\n\n\n
Another pressing question concerns the role of the Central Bank of Libya itself. Will it merely act as a mediator or political guarantor of this agreement? Or is it seeking to transform it into a more institutionalized and structured process by pushing toward the adoption of a unified national budget with clear objectives, standards, and limits?<\/p>\n\n\n\n
Simply overseeing an agreement between competing parties may achieve temporary calm, but it is not sufficient to manage public finances on sound foundations. The true role of the central bank, as the guardian of monetary and financial stability, requires linking any expansion in spending to a comprehensive framework that ensures:<\/p>\n\n\n\n
This leads to a crucial question: will this agreement evolve into an actual unified national budget?<\/p>\n\n\n\n
If so, it must include clear targets, precise revenue estimates, defined spending categories, and legal mechanisms ensuring that all public revenues are fully transferred without exception, diversion, or withholding. This is essential because no public spending system can be controlled unless revenues themselves are unified, transparently managed, and subject to a clear central framework. Otherwise, if revenue diversion, off-budget management, or politically motivated withholding continues, any spending agreement will remain fragile and likely to collapse at the first serious test.<\/p>\n\n\n\n
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Professor of Finance and founder of the Libyan capital market, Suleiman Al-Shuhoumi, wrote in a post: The Central Bank of Libya supervised the signing of an agreement between representatives of the Libyan High Council of State and the House of Representatives. This step appears, on the surface, to be a serious attempt to contain one […]<\/p>\n","protected":false},"author":13,"featured_media":256692,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[553],"tags":[613],"class_list":["post-256691","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-post-of-the-week","tag-libya"],"acf":[],"_links":{"self":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/comments?post=256691"}],"version-history":[{"count":1,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256691\/revisions"}],"predecessor-version":[{"id":256693,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256691\/revisions\/256693"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media\/256692"}],"wp:attachment":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media?parent=256691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/categories?post=256691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/tags?post=256691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}