Although the first half of 2014 is coming to an end, the North African state of Libya still does not have a budget.
This is despite emerging from a political crisis that paralyzed the country for over a month, following the controversial election of Ahmed Meitig as Prime Minister.
The General National Congress (GNC), the country’s highest political and legislative authority, has failed several times to form a quorum to vote on the budget because of tensions between the political blocs in parliament following the disputed election of Meitig before his election was invalidated by the Supreme Court on 9 June.
Despite the Supreme Court’s decision, which has certainly eased tension and led to a normalization of political life, the GNC still cannot vote on the Financial Act 2014.
On Sunday, Parliament again failed to have a quorum as only 60 members were present whereas the adoption of the budget requires 120 votes out of the 200 MPs that make up the Congress.
According to political analysts, differences between members of the GNC are still deep because of the split resulting from debates on the appointment of Meitig.
They say that the increasing hostility of the population against GNC, which is blamed for its inability to get the country back on track for three years, and the verdict of the Supreme Court, have considerably weakened the GNC.
The call of former Prime Minister Abdallah al-Theni’s government to have access to reserves of the country, reflects the plight facing Libya which has been deprived of its oil resources for over 10 months due to the closure by armed separatist groups of the main oil terminals in the east. This action has deprived the country of 600,000 barrels of oil per day.
In addition, sporadic protest movements on oil facilities staged by workers demanding pay rise or by the local populations to secure concessions from the government or jobs, have contributed to a fall in production to less than 200,000 barrels per day as against 1.5 million barrels per day in normal times.
This situation has led to losses estimated at US$30 billion according to the Libyan Central Bank (BCL), which states that the country currently records US$1 billion of oil revenues against US$4 to US$5 billion prior to these developments.
The Financial Act 2014 has already been handed over by the government to the Congress which revealed through the Finance and Budget Commission that the outline of the general budget of the state is 58 billion dinars (US$50 billion).
According to the Finance and Budget Commission, the 2014 budget will be characterized by the rationalization of expenditure and the ironing out of malfunctions.
The 2014 budget was calculated on the basis of production of 600,000 to 800,000 barrels of oil per day at a rate of US$100 a barrel, according to the Commission. This does not correspond to reality, despite the statements of Acting Oil Minister, Omar Chakmak, who is expecting a production of 800,000 to 900,000 b/d by the end of 2014.
Today, the major problem for Libya is to find money for the budget, as oil revenues have drastically declined following the drop in production to its lowest level.
Monetary reserves of Libya are estimated at US$110 billion against US$130 billion recorded in the first half of the year at the beginning of protest movements.
The BCL believes that these funds should benefit the next generation.
However, such an argument is not shared by financial expert, Mahmoud Ftissi, who thinks that the current phase is exceptional and that the State is under “reconstruction” and as a result needs resources.
He says in this regard that the BCL could make an exception to the rule and allow the government to use these funds to deal with the management of the country.
Naji Issa, deputy director of research and statistics department, says BLC has already granted the government a loan of US$10 billion dinars and cannot go beyond this amount in accordance with the law.
According to him, this loan was used to pay the salaries of state officials in recent months. He notes the decrease in other state resources such as taxes characterized by a very low recovery rate due to insecurity and weakness of the state deprived of coercive force.
The only solution to deal with this budget crisis once and for all is the resumption of oil exports, which account for over 80 per cent of state resources and an amicable settlement of the crisis in the oil terminals, says Issa.