Libya: Robust growth - then it all ground to a halt
Libya's economy was humming along before trouble flared in the country six months ago.
Economic growth reached 10.3 per cent last year, according to an IMF estimate, primarily driven by higher oil output.
"The fiscal and external balances remain in substantial surplus and are expected to strengthen further over the medium term, and the outlook for Libya's economy remains favourable," a report by the IMF executive board concluded on February 15.
Two days later, demonstrations against Muammar Qaddafi's rule started in Benghazi, a city in the east of the country. Six months later and the economy has remained paralysed by civil war.
Even before the unrest, however, Col Qaddafi's government was facing challenges as citizens complained of missing out on the benefits from the rapid economic expansion. Unemployment remained high among the young and growing population. The cost of food and other basic goods was also on the rise, reaching 4.5 per cent last year, according to the IMF. Higher oil revenue, increasing money in the economy and rising global commodity prices were the main reasons cited for the increase.
Attempts to diversify the economy away from a reliance on oil were having mixed results. Non-oil growth strengthened last year by 7 per cent, mainly as a result of big rises in public spending. New laws were also passed including the Libyan Investment Authority Law, aimed at enhancing the regulatory environment for investment.
But the IMF had long been urging the government to speed up reforms to diversify the economy.
Published: August 22, 2011 04:00 AM