The World Bank expects Libya’s oil production to shrink by 41% in 2020. It reported that the Libyan economy was recently exposed to several overlapping shocks. Those shocks are most notably the closure of the oil fields, the drop in oil prices, and the COVID-19 pandemic.
The Washington-based institution stressed the need to find a political solution, and implement the reforms needed to achieve private sector-led growth and job creation in Libya. It stated that real GDP growth slowed sharply to 2.5% in 2019. This is mainly due to the armed confrontations that occurred in that year.
Oil production decreased from 1.2 million barrels per day in December 2019, to 100,000 barrels per day in April 2020. This is due to the escalation of military confrontations, which caused a severe economic crisis.
The bank said in its report that the economy will worsen in Libya, if the political crisis is not settled. “The oil GDP is expected to decline by 41% this year. The approved budget for 2020 partly reflects this dire situation, as the largest deficit has been forecast in recent years. Consequently, reserves will decline further this year.”
The report concluded that Libya is expected to produce only 170,000 barrels per day on average in 2020. This is less than one-seventh of last year’s production.
Last month, the leader of the Libyan National Army (LNA), Field Marshal Khalifa Haftar announced the resumption of oil production, “as long as oil funds are not used to finance terrorism.”