The International Monetary Fund on Monday urged Libya to have a more orderly leadership transition process after the country's central bank was thrust into crisis.
In September, representatives for Libya's rival governing bodies reached a UN-assisted agreement to end the central bank's leadership crisis by nominating an interim governor and deputy.
The agreement came a month after the leader of the Presidency Council in Tripoli moved to replace governor Sadiq Al Kabir, which led to Libya's eastern factions shutting down the country's oilfields in protest.
Unlike in most other countries, where central banks are designed to promote economic stability by implementing monetary policy, the Central Bank of Libya is responsible for paying employees in the public sector and also manages the country's oil revenue.
The crisis was the latest surrounding the central bank since Libya's division in 2014.
“We welcome the agreement to resolve the dispute over the leadership of the Central Bank of Libya,” IMF staff said at the conclusion of the fund's visit.
The IMF also called the agreement a “positive milestone after a decade of board inactivity”.
“Going forward, Libya needs a more orderly process for leadership transition to foster stability and enhance governance,” the IMF said.
The IMF said it had lowered Libya's economic outlook for 2024 following the oil disruption in August and September. At the same time, Libya's growth forecast for 2025 has been upwardly revised to due the expected rebound in production, while the medium-term outlook is unchanged.
The IMF did not release its projections for GDP growth. In its World Economic Outlook released in October, the IMF projected Libya's GDP to moderate at 2.4 per cent growth this year before rising to 13.7 per cent next year, before settling at 2.3 per cent in the medium term.
A number of downside risks cloud Libya's economic forecast, including renewed political tensions and lower-than-expected oil prices which he IMF said could reduce fiscal space. The IMF also noted it is “critical” for Libyan officials to agree on spending authorities through a unified budget.
“Against this backdrop, and in line with the IMF’s previous recommendations, controlling fiscal expenditure remains the preferred policy approach consistent with Libya’s current macroeconomic framework,” the IMF said.
