World Bank: Elections Essential for Libya’s Recovery

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In its October report on the Libyan economy, the World Bank said that in the coming months Libya is projected to record a Gross Domestic Product (GDP) growth rate of 78.2% in 2021. However this will only be possible if the presidential and parliamentary elections as well as the reunification of public institutions proceed, and oil production persists.

In turn, trade and current account balances are projected to record double digit surpluses as a share of GDP, according to the report. The fiscal balance may record a surplus as well, given the strong rebound of oil production and exports and following the devaluation of the currency. This has reduced the cost of financing public sector salaries and goods and services using dollar-denominated oil revenues.

The report confirmed that Libya made significant progress towards ending its decade-long conflict and moving towards reunification in 2021. This resulted in a strong rebound of oil production and economic activity, as well as a consequent upswing in fiscal, trade, and current account balances.

“Nevertheless, households still struggle with food insecurity, poverty, and poor public service delivery. Challenges with organizing national elections for December 2021 raise the spectre of a deteriorating political and security situation which would threaten progress towards peace and recovery,” the World Bank added.

It explained that following a massive contraction of the hydrocarbon sector in 2020, driven by intensifying conflict and a blockade of oil terminals and fields, the sector, and in turn the Libyan economy, are witnessing a significant rebound.

“Oil production has averaged 1.2 millions of barrels per day (mb/d) during the first half of 2021, compared to an average of 0.3 mb/d during the first 9 months of 2020 and 0.9 mb/d during the fourth quarter of the year,” the report noted.