Libya: 2025 Article IV Consultation-Press Release; and Staff Report

The 2025 Article IV Consultation discusses that the continued political division and widespread fragilities have hindered the authorities’ capacity to control public expenditure and enact necessary reforms. Real gross domestic product growth is estimated to have declined to around 2 percent in 2024 from 10 percent in 2023, driven by a contraction in the hydrocarbon sector. The outlook is dominated by developments in the oil sector, and the country remains exposed to global downside risks. The current account is slated to post a small surplus in 2025 before turning into a small deficit over the medium term, as oil prices remain subdued. The fiscal balance is projected to remain in deficit under the weight of continued large government spending. Controlling expenditure will be key to ensure sustainability and to achieving intergenerational equity. Structural and governance reforms would foster the emergence of a diversified, sustainable, and private sector-led economy. Forging a comprehensive reform program aimed at reducing dependence on oil revenues should be at the top of the authorities’ agenda.