In Libya, 2023 has been a year overshadowed by economic deterioration, deeply impacting the social situation of its people. This period is characterized by the continuous decline in living standards and economic collapse, exacerbating the hardships of the Libyan populace.
The armed militias in Libya, supported by the successive governments that have controlled the western region, have significantly influenced this dire situation. Their presence has led to a security breakdown and widespread corruption throughout the country.
Particularly in 2023, Libya witnessed significant economic collapses, exacerbated under the rule of the expired-mandated Government of National Unity. This government, despite receiving widespread support upon taking power, failed in achieving its primary objectives, including conducting elections and implementing urgent economic reforms to improve the Libyan people’s conditions.
The Libyan Audit Bureau, the country’s leading financial oversight body, reported numerous violations in its latest report. These included embezzlement of public funds through fictitious contracts, expansion in contract awards for supplies, and millions spent on luxury car purchases. Furthermore, the report detailed the stay of non-government-related individuals in hotels abroad at public expense.
The report also highlighted collusion with the state’s adversaries in disputes and arbitration cases, actions bordering on treason against the Libyan state. It revealed public fund wastage through unnecessary supply contracts and direct appointment processes, alongside inflated contracts for catering, travel, and accommodation expenses.
Moreover, it exposed the payment of phantom salaries through forged national IDs and embezzlement from funds meant for treating wounded and sick Libyans abroad. The report also disclosed Prime Minister Abdul Hamid Dbaiba’s approval of purchasing luxury vehicles for ministers and government officials, amounting to 40.5 million Libyan dinars.
Additionally, the Audit Bureau revealed deviations in the public employment sector under the Government of National Unity, including random appointments, administrative negligence, favoritism, and decreased productivity. Official documents disclosed corruption involving ministers and officials, including currency and precious metal smuggling.
For instance, security forces at Mitiga International Airport in Tripoli foiled a significant smuggling operation. Furthermore, the Libyan Public Prosecutor’s Office released statements regarding financial corruption cases involving Libyan officials, including the arrest of former directors of the Sahary Bank and a departmental head involved in enabling 13 companies to profit from $70 million in foreign currency, traded in the parallel currency market.
As a continuation of the significant economic collapse, fueled by ongoing crises and rampant corruption, the exchange rate of the US dollar against the Libyan dinar rose sharply in 2023. The dollar rate in the parallel market reached 6.18 dinars, causing widespread concern.
This situation was aggravated by government assurances turning into a nightmare for the public, especially with the exaggerated rise in consumer goods and daily necessities. The price increase revealed a significant disparity between the foreign currency rates, particularly the dollar in Libyan banks, and its rate in the black market. The government’s attempt to stabilize inflation by undervaluing the dinar and fixing its rate directly impacted commodity prices.
Experts attribute the continuous fluctuation and rise in exchange rates to temporary solutions by the Central Bank of Libya, especially after changing the exchange rate. The Central Bank’s provision of hard currency within the country, through 10,000-dollar bank cards allowing citizens to purchase dollars at the official rate and withdraw them abroad, mostly ended up in the domestic market. This process, largely managed by black market traders, has become a normalized occurrence without government oversight or Central Bank review.
These challenges have directly influenced the prices of goods, food, and essentials. At the beginning of the year, prices for poultry, eggs, and meats skyrocketed, with meat prices reaching up to 55 dinars per kilogram in some regions. Pharmaceutical products also saw a general price increase, with cooking gas prices rising by 25% from 20 to 25 dinars.
Inflation remains a primary cause of rising commodity prices, a problem faced by many countries currently, along with the impact of the Russian-Ukrainian war. Libya, almost entirely dependent on imports for its essential needs, with 90% of goods imported, is particularly vulnerable to these global economic trends.
The financial allocations spent to appease armed groups and militias are among the significant reasons for the severe economic downturn in Libya and the decline in services, particularly as these funds were intended for developmental purposes.
The Central Bank of Libya’s report on revenues and public expenditure, covering January 1st to August 31st, revealed that the Defense Ministry under the Government of National Unity, headed by Prime Minister Dbaiba, spent 2.86 billion dinars. This expenditure raises questions, particularly in a country that imports all its military equipment.
As Libya’s economy continues to struggle in 2023, the need for systemic reforms and strong governance mechanisms becomes increasingly apparent. These challenges underscore the urgency for actions that can steer the nation toward stability and sustainable growth.