Country Report Libya November 2009

Outlook for 2010-11: Fiscal policy

In recent years high oil revenue has been deployed to overhaul the country's dilapidated infrastructure and the budget balance has been comfortably in surplus. Lower average oil prices in 2009 have led to less revenue, while spending has been maintained, leading to an estimated deficit of 2.2% of GDP. Growth in expenditure is expected to pick up in 2010 as revenue increases owing to slightly higher oil prices and an increase in OPEC production quotas. Efforts to cut the size of the civil service have been postponed and a pay increase is planned, also increasing spending. However, delayed project implementation will limit disbursements, and there will be some reductions in subsidies. Spending is forecast to fall slightly in 2011 as a drop in international oil prices leads to restraint. Therefore, a fiscal surplus of 4.8% of GDP is expected in 2010, followed by a lower surplus of 2.9% of GDP in 2011.

© 2009 The Economist lntelligence Unit Ltd. All rights reserved
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