| COUNTRY PERSPECTIVES
-
LIBYA |
|
Country presentation |
|
|
Located in North Africa, Libya is the fourth largest country in Africa. Bordering the Mediterranean Sea, it has land borders with Tunisia, Algeria, Niger, Chad, Egypt, and Sudan. Libya is a member of the Arab Maghreb Union (AMU) and a founding member of the Organization of African Unity (OAU). |
|
| Latest
News -
Libya |
| Latest
Investments -
Libya |
 |
Documents |
 |
|
|
 |
|
| |
|
Introduction |
From the earliest days of his rule following the 1969 military coup, Colonel Muammar al-Qadhafi has espoused his own political system: the “Third Universal Theory”, codified in the Green Book. The system is a combination of liberalism and Marxism and is supposed to be implemented by the Libyan people themselves.
After more than ten years of international isolation due to the 1988 bombing of a Pan Am plane over the Scottish town of Lockerbie, the U.N. sanctions were suspended in April 1999 and finally lifted in September 2003 after Libya settled the Lockerbie claims and agreed to stop developing weapons of mass destruction. Qadhafi has made significant strides in normalizing relations with western nations since then and has made progress on economic reforms as part of a broader campaign to bring the country back into the international fold. The country has huge potential for modernization and foreign investments and is currently experiencing a business boom including oil and gas, thanks to plentiful high-quality hydrocarbon reserves. Other major opportunities are in infrastructure projects, airports and ports, healthcare, tourism and education and training. Libya will need to make considerable progress in all these areas if it is to realize its full potential.
Libya is generously endowed with energy resources, with one of the largest proven oil reserves in the world (39.1 billion barrels of reserves according to OPEC statistics and 1.500 billion m3 of gas reserves). Libya’s economy is heavily reliant on oil revenues but attempts are underway to diversify. Libya’s income from oil exports has increased sharply in recent years, posting $28.3 billion in 2005 and forecast at $31.2 billion in 2006, up from just $5.9 billion in 1998. The rebound in oil prices since 1999, along with the lifting of U.S. and U.N. sanctions, have resulted in an improvement in Libya's foreign reserves ($31 billion as of June 2005), trade balance (a $17 billion surplus in 2005) and overall economic situation.
A part due to higher oil export revenue, Libya experienced strong economic growth in 2003, with real gross domestic product (GDP) estimated to have grown by about 9.1 percent. Economic and financial conditions continued to be favourable in 2004 and 2005, with GDP growth of 4.6 percent and 3.5 percent respectively, projected at 5 percent for 2006 in the IMF’s annual economic review. This level of oil revenue and a small population give Libya one of the highest per capita GDPs in Africa, posting $6800 in 2005. Soaring oil prices contributed to a significant increase in the external current account surplus, reaching about 15 percent of GDP. Oil export earnings increased by 47 percent to about $29 billion and non-oil exports, mainly petrochemicals, also grew markedly. Nearly 85 percent of oil production is exported, accounting for 95 percent of total exports and 60 percent of the country’s income. Kept down to OPEC’s quota, production has for several years come in between 1.3 and 1.4 million barrels per day, making Libya the second largest oil exporter in Africa. However almost $30 billion in investments in oil exploration will be needed to bring production of hydrocarbons to 3 million barrels per day by 2010.
Imports grew by 24 percent to some $11 billion, boosted by increased domestic demand. Overall, gross international reserves rose to about 32 months of imports (based on 2005 volume).
a’s main trading partners are the EU (mainly Italy, the United Kingdom, Germany and France), Maghreb countries, and Turkey.
Libya has begun to respond to international, political and economic pressure, adopting market orientated reforms and introducing initial liberalization of the socialist-oriented economy. Since settlement of the Lockerbie claims and lifting of international sanctions, many countries have re-established dialogue with Libya. Qadhafi has affirmed his willingness to move towards economic reform, liberalization and a reduction in the state's direct role in the economy.
In June 2003 he said that the country's public sector had failed and should be abolished and called for privatization of the country's oil sector along with other areas of the economy. He also pledged to bring Libya into the World Trade Organization (WTO), with adoption of a new customs system (Law-Decree n° 83 of July 7, 2005) including abolition of licenses, lowering of tariff protection by removing import taxes on all products (except 85 items), in favour of a 4 percent customs service (handling) fee, reducing customs duty on products manufactured locally to a maximum of 2.5 percent and consumer tax to rates of 25 or 50 percent (similar to VAT, which does not yet exist). |
|
| |
|
References |
| Official name |
Great Socialist People’s Libyan Arab Jamahiriya |
| Capital |
Tripoli (1.3 million inhabitants) |
| Surface area |
1,760,000 km2 |
| Population |
5.7 million (2004 census) |
| Languages |
Arabic. English and Italian widely spoken. |
| GDP 2005 ($US, market prices) |
38.735 billion |
| Per capita GDP ($US 2005) |
6,800, 11,629 in PPP valuation (purchasing power parity). |
Currency (2005)
|
1 € = 1.65 Libyan Dinar (LYD)
1 $ = 1.31 LYD |
| Religion |
Muslims (70 %), Christians (30 %) |
| National holiday |
September 1 (commemorating the 1969 revolution) - December 24 (Independence day from Italy). |
| Association Agreement with EU |
Observer since 1999 |
| WTO membership |
Observer since 2004, in negotiation for its accession. |
|
Sources: IMF, Libya Country Report n°5/83, March 2005 and Country Report No. 06/136, April 2006 and IMF World Economic Outlook database.
|
|
| |
|
| |
|
|
|
|
