Global Arab Network | Libya to Increase Budget by 32% at .6 Bln

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Libya to Increase Budget by 32% at $46.6 Bln

Global Arab Network - - Rabih Serrai

Monday, 15 February 2010 16:44

Libya plans to increase budget spending by 32 percent to a record amount in 2010, a government spokesman told Reuters.

Libya's government is preparing to issue a budget law for this year setting out 58 billion dinars ($46.6 billion) in expenditure, spokesman Mohamed Baayou told Reuters.

Last year's budget spending was 44 billion dinars.

He did not give a reason for the increase but said the government continued to subsidize some consumer goods and that it was committed to continuing investment in infrastructure and public services.

"The budget for this year will be about 58 billion Libyan dinars," Baayou said after a session of the General People's Committee (GPC).

"This is the biggest budget," he added.

He also said the government would be spending 82 billion dinars ($65.86 billion) of budget funds over the next three years on development and infrastructure.

During recent meeting, the GPC discussed the obligation to implement decisions adopted earlier this year by Basic People’s Congresses, the legislative and public policy body in the country.

The spokesman said, as quoted by Reuters, Libya would also issue laws to encourage investment and organize economic activity.

The laws "will set out a clear, appropriate legislative framework for the diversification of the Libyan economy," said Baayou. "The target is to achieve economic stability in Libya.”

The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 60% of public sector wages.

The weakness in world hydrocarbon prices in 2009 reduced Libyan government tax income and constrained economic growth. Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society.

Libyan officials in the past five years have made progress on economic reforms as part of a broader campaign to reintegrate the country into the international fold. This effort picked up steam after UN sanctions were lifted in September 2003 and as Libya announced in December 2003 that it would abandon programs to build weapons of mass destruction.

The process of lifting US unilateral sanctions began in the spring of 2004; all sanctions were removed by June 2006, helping Libya attract greater foreign direct investment, especially in the energy sector. Libyan oil and gas licensing rounds continue to draw high international interest; the National Oil Company set a goal of nearly doubling oil production to 3 million bbl/day by 2012. Libya faces a long road ahead in liberalizing the socialist-oriented economy, but initial steps - including applying for WTO membership, reducing some subsidies, and announcing plans for privatization - are laying the groundwork for a transition to a more market-based economy.

The non-oil manufacturing and construction sectors, which account for more than 20% of GDP, have expanded from processing mostly agricultural products to include the production of petrochemicals, iron, steel, and aluminum.

Climatic conditions and poor soils severely limit agricultural output, and Libya imports about 75% of its food. Libya's primary agricultural water source remains the Great Manmade River Project, but significant resources are being invested in desalinization research to meet growing water demands.

Global Arab Network

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Last Updated on Monday, 15 February 2010 16:48

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