Written by: Financial analyst Khaled Al-Zantouti<\/p>\n\n\n\n
Should we first eliminate fuel smuggling, which amounts to around 64 billion dinars annually, or should we suddenly demand that citizens pay 400 dinars to fill their car fuel tanks instead of just 7.5 dinars?<\/p>\n\n\n\n
From time to time, some voices call for the immediate replacement of subsidies with cash compensation, citing the experiences of neighboring countries in this regard. Some have even gone as far as issuing statements praising what those countries have done.<\/p>\n\n\n\n
Unfortunately, however, they forget that those countries only began considering cash subsidy replacement after spending nearly ten years organizing and reforming their subsidy systems through structural economic reforms designed and required by the International Monetary Fund. These countries gradually restructured subsidies through coordinated and phased measures over a decade or more.<\/p>\n\n\n\n
This occurred after those countries had developed advanced public transportation networks and implemented major engineering projects in public transit, including large-scale monorail systems extending across dozens of kilometers.<\/p>\n\n\n\n
They also overlook the fact that such countries do not suffer from smuggling, as they maintain highly effective control over their borders. Therefore, comparing Libya to those countries is fundamentally illogical because the circumstances are vastly different.<\/p>\n\n\n\n
There is no doubt that everyone has long called for organizing subsidies in one way or another, whether through cash support or a regulated and controlled commodity subsidy system. However, the primary demand has always been to eliminate smuggling first\u2014this damaging phenomenon that international newspapers have estimated at around $8 billion annually.<\/p>\n\n\n\n
This figure may equal or even exceed Libya\u2019s annual domestic fuel consumption. Therefore, the country\u2019s core problem is smuggling, at a time when the state remains unable to combat it, for reasons known only to God. Meanwhile, drones and various weapons are deployed in internal conflicts, yet the state is still unable to secure its borders and combat smuggling that directly threatens national resources and sovereignty.<\/p>\n\n\n\n
Yes, we support subsidy reform, but for clear objectives: rationalizing consumption, combating smuggling, and ensuring fair distribution.<\/p>\n\n\n\n
Would it not be more appropriate to first eliminate smuggling, and only then address subsidy reform scientifically and logically through recognized mechanisms\u2014whether commodity subsidies or cash support for everyone or only eligible groups, implemented gradually?<\/p>\n\n\n\n
As for demanding the immediate cancellation of subsidies and replacing them with cash compensation, that is nearly impossible, because it cannot realistically be implemented overnight in an unregulated environment with unreliable data. The issue requires careful studies, defining the purpose of subsidies, determining how they should be delivered, identifying beneficiaries, and establishing appropriate compensation values.<\/p>\n\n\n\n
It is difficult to imagine ordinary citizens suddenly finding themselves at fuel stations forced to pay 400 dinars to fill their cars instead of only 7.5 dinars.<\/p>\n\n\n\n
Would it not be wiser to first eliminate smuggling before addressing subsidy reform in a scientific and practical manner?<\/p>\n\n\n\n
According to international statistics, the average Libyan citizen\u2019s annual fuel consumption exceeds three times the global average, which is unreasonable.<\/p>\n\n\n\n
Therefore, subsidies must indeed be organized and carefully studied, but under normal conditions free from smuggling and corruption. Only then can reforms be implemented gradually and according to the framework agreed upon by experts and decision-makers.<\/p>\n\n\n\n
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