The International Monetary Fund (IMF) said Libya is making remarkable strides in economic recovery, growth and development after the revolution in the country.
“Economic growth in 2012 exceeded 100 percent, reflecting a strong recovery from its collapse during the revolution. Latest indicators are pointing to a restoration of hydrocarbon output later this year and a full recovery of growth in the non-hydrocarbon sector in 2014,” an IMF senior official, Mr. Ralph Chami, said in a statement.
Chami led a mission to Tripoli, Libya, between 20 February and 7 March, for discussions with the Libyan authorities under the IMF’s annual Article IV consultations.
He disclosed that inflation fell to 6 percent in 2012, and a further decline is expected this year. “With a considerable pickup in reconstruction expenditure and private demand, non-hydrocarbon growth is expected to average 15 percent during the period 2013–2018,” he said.
Chami also stated that, “the financial situation began to normalize after most of the UN sanctions that had frozen Libya’s foreign assets were lifted on 16 December, 2011, allowing the central bank to provide foreign exchange liquidity to banks and help normalize commercial banking operations.”
According to him: “In 2012, broad money grew by 11.5 percent with a shift from currency into deposits reflecting increased confidence in the banking system.”
“The banking sector appears well capitalized, but it may be vulnerable to asset quality deterioration,” the IMF official noted.
Chami, however, said that “more recently, the Libyan authorities have introduced legislation that prohibits the payment of interest, which unless handled carefully, could pose risks to the financial sector and undermine efforts to diversify the economy”.
“The short-term challenges are to manage the political transition, normalize the security situation, address severe institutional capacity constraints to ensure the timely compilation and dissemination of key statistics, and exercise budget discipline while maintaining macroeconomic stability,” he stressed.
“Over the medium term, the authorities should address a range of issues, including institutional capacity building, improving the quality of education, rebuilding infrastructure and putting in place an efficient social safety net.
“Developing the financial market, improving the management of the country’s resource wealth and associated financial flows with an efficient and transparent system, and reducing hydrocarbon dependency through private sector–led growth,” he stated.
The statement further said: “A significant reduction in unemployment, which is largely structural, will require major changes in economic policies and institutions”.
“Sustainable, employment-generating growth will require a business environment that is conducive to private-sector development with a focus on diversification of the economy to create employment opportunities in the private sector,” it quoted the IMF official as saying.
“To help build capacity, the Libyan authorities and the IMF have agreed on a comprehensive technical assistance programme,” the statement said.
It, however, said: “Data compilation remains weak and responsibilities are spread over several agencies”.
“The Libyan authorities are keen to improve data compilation and transparency, but they need international assistance to formulate and implement a comprehensive strategy,” it added.
PANA learnt that the IMF mission met with Prime Minister Ali Zeidan, Finance Minister Haithem Jalgham, Central Bank Governor Saddek Elkabeer, General National Congress Chairman Mohammed Magariaf, and other government and central bank officials.
Others are members of the General National Congress and representatives of civil society groups.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with member countries, usually every year.
An IMF team visits the member country, collects economic and financial information, and discusses with officials on the country’s economic developments and policies.
On return to IMF headquarters, the team prepares a report, which forms the basis for discussion by the IMF Executive Board and the summary is transmitted to the country’s authorities.