Libya

Politics:

• Analysis

  Libya politics: Quick View - Government presents manifesto to parliament

  Event

  In a special session of the General National Congress (GNC) on December 18th, the newly elected government of Ali Zidan presented its programme to parliament.

  Analysis

  The programme contained little in terms of concrete policy, but ministers took the opportunity to outline their broad aims. Most significantly, Mr Zidan said the government would submit a proposal to amend the constitutional declaration, which he argued has impaired the ability of interim governments to function. In particular, Mr Zidan argued that the president of the GNC had appeared to take on some of the prerogatives of the government, such as appointments to military and diplomatic posts. The National Transitional Council issued a constitutional declaration in August 2011 and amended it in March 2012.

  The deputy prime minister, Awad al-Barassi, said that a special executive body would be set up under the Prime Minister's Office which would be tasked with drafting economic plans. In addition the new body will seek to fight corruption and employ the resources and skills that were used to positive ends during the revolution.

  Salah Margani, the justice minister, promised that the new Libya would be a country characterised by the "rule of law, justice and respect for human rights", but did not propose any specific new policies. Meanwhile the communications minister, Osama Siala, vowed to increase investment in the country's communication networks, but said that before this happened his sector would have to overcome major difficulties such as damaged infrastructure, inadequate training and outdated equipment.

  A day later, Mr Zidan announced that he had chosen a military governor for the south of Libya, which had been declared a military zone a few days earlier. He declined to announce the name of the individual, but said that military units had already moved south to begin their work and that warplanes and ground patrols would be used to stop illegal immigration and drug trafficking.

  December 20, 2012

• Background

  Libya: Key figures

  Mohammed al-Magariaf

  Mr Magariaf was elected president of the General National Congress (GNC) in August, beating an independent candidate, Ali Zaydan, by 113 votes to 85. A former economics professor, Mr Magariaf also served as the Libyan ambassador to India but resigned from his post in 1980 and over the next 30 years became one of Libya's strongest dissident voices. In 1981 he founded the National Front for the Salvation of Libya (NFSL), perhaps Libya's best-organised opposition group, which tried several times to assassinate the deposed leader, Muammar Qadhafi. Mr Magariaf himself was the target of several assassination attempts in the 1980s. The NFSL was dissolved in May 2012 and its leaders established the National Front Party, which now holds three seats in the 200-member GNC.

  Mustafa Abu Shagur

  Libya's first elected prime minister, Mr Abu Shagur took office in mid-September after defeating Mahmoud Jibril by two votes in the GNC. Mr Abu Shagur secured his lead after members of parliament from the Muslim Brotherhood's Justice and Construction Party switched their vote following the elimination of their preferred candidate, Awad al-Barassi, in the first round of voting. He was born in Tripoli in 1951, and gained a degree in electrical engineering from the University of Tripoli and a doctorate from the California Institute of Technology. He became a professor of electrical and computer engineering at the University of Alabama in 1995, and is also reported to have worked for NASA. He returned to Libya in May 2011 to become an adviser to the National Transitional Council (NTC). In November 2011 he was chosen by Abdel-Raheem al-Keib to be his deputy prime minister. Mr Abu Shagur was one of the original members of the NFSL (but is not currently a member of the National Front Party) and is close to Mr Magariaf. This positive relationship between the heads of the executive and legislature should be conducive to decision-making.

  Mahmoud Jibril

  A US-educated economist with a PhD in political science from the University of Pittsburgh, Mr Jibril returned to Libya in 2007 to head the National Economic Development Board, an initiative pushed by Saif al-Islam Qadhafi, the deposed Libyan leader's son. Mr Jibril defected from the Qadhafi regime in February 2011 to join the rebellion in Benghazi and was instrumental in garnering international support for the revolutionaries. He went on to become the NTC's de facto prime minister, resigning from his post in late October 2011 in keeping with a pledge by members of the NTC's executive not to participate in the next government. His latter days in office were marred by accusations of nepotism and criticism that he was trying to grab too much power. The National Forces Alliance, a broad coalition headed by Mr Jibril, won 30 out of 80 seats reserved for parties in the GNC election in July. Mr Jibril lost out to Mr Abu Shagur in the election for prime minister in September.

  Mohammed Sawan

  Mr Sawan heads the Muslim Brotherhood's Justice and Construction Party, which holds 17 out of 80 party seats in the GNC, making it the second-strongest party in the interim parliament. A Misuratan, Mr Sawan was jailed by the Qadhafi regime for several years until 2006, after which he worked as a hotel manager.

  September 27, 2012

• Structure

  Libya: Political structure

  Official name

  Formerly the Great Socialist People's Libyan Arab Jamahiriya. A new name has yet to be confirmed

  Form of state

  Libya had been a jamahiriya (republic of the people) since 1977 in accordance with the Third Universal Theory propounded by Muammar Qadhafi in his Green Book. The collapse of the Qadhafi regime brought his system of governance to an end. An election to the General National Congress (GNC, interim parliament) was held in July 2012. A committee will be appointed or elected to prepare a new constitution. This will pave the way for a full parliamentary election and the establishment of a more democratic political system

  Head of state

  Mohammed al-Magariaf is president of the GNC. Ali Zidan was elected prime minister in mid-October after the previous prime minister-elect, Mustafa Abu Shagur, was dismissed

  Executive

  The GNC has approved Mr Zidan's government, but referred six of the new ministers to the Integrity Commission, which will vet them. Mr Zidan's government will serve until after a full parliamentary election is held

  Legislature

  The GNC, which will perform the role of a transitional legislature, took over power from the National Transitional Council on August 8th. Of the 200 seats in the legislature, 120 have been allocated to independents and 80 to political parties. The National Forces Alliance, a moderate coalition, holds 39 seats and the Muslim Brotherhood's Justice and Construction Party holds 17

  Prime minister: Ali Zidan

  GNC president: Mohammed al-Magariaf

  Key ministers (outgoing government)

  Agriculture: Ahmed al-Urfi

  Communications: Osama Siala

  Defence: Mohammed al-Bargati

  Economy: Mustafa Abu Funas

  Education: Mohammed Abubaker

  Electricity: Mohammed Muhairiq

  Finance: Alkilani al-Jazi

  Foreign affairs: Ali al-Aujali

  Health: Nurredin Daghman

  Housing: Ali al-Sharif

  Industry: Suleiman al-Fitouri

  Interior: Ashour Shuwail

  Justice: Salah Margani

  Labour: Mohammed Suweilim

  Oil & gas: Abdel Bari al-Arousi

  Planning: Mahdi Genia

  Social affairs: Kamila al-Mazini

  Transport: Mohammed al-Ayib

  Tourism: Ikram Imam

  Water resources: Alhadi Hinshir

  National Oil Corporation chairman

  Nouri Berouin

  Central Bank governor

  Sadeeq Omar al-Kabeer

  December 11, 2012

• Outlook

  Libya: Key developments

  Outlook for 2013-17

  • Political power has been transferred from appointed officials to elected representatives, but political uncertainty will remain high for much of the forecast period.
  • The transition process will face delays owing to security problems and political disputes. Failure by the government to meet or manage public expectations may spark social unrest over the forecast period.
  • Economic policy in the post-Qadhafi era is expected to combine a heavy central government role in reconstruction with market-oriented reforms.
  • Following a massive rebound in 2012, the Libyan economy will grow by an annual average of 9.6% in 2013-17 on the back of increased activity in both the oil and the non-oil sectors.
  • We estimate that inflation averaged 4.8% in 2012, as consumer prices fell year on year during the second half because of a helpful base effect. We expect inflation to average 3.5% in 2013-17.
  • We estimate that the current account recorded a large surplus in 2012 and forecast that the surplus will average 23.2% of GDP a year over the forecast period on the back of steady oil exports.

  Review

  • The government of Ali Zidan officially took office on November 14th. However, eight of Mr Zidan's 27 nominated ministers were referred to the Integrity Commission for vetting.
  • The Integrity Commission has cleared most of the nominated ministers, including Ashour Shuwail (interior) and Ali al-Aujali (foreign affairs).
  • Benghazi's chief of security, Farag al-Dersi, who had sought to limit the power of militias in the city, was assassinated in late November.
  • The oil and gas minister, Abdelbari al-Arusi, announced plans to spin off the National Oil Corporation's refining and petrochemicals activities into a new company with its headquarters in the east of the country.
  • The Zawiya refinery, also in the east of the country, was closed for the second time in a month on November 29th as protesters blocked entry to the facility.
  • The General Nation Congress has tasked several parliamentary committees with preparing a law that would abolish interest on bank loans.
  • Annual inflation fell to 8.9% in June from 9.2% in May, according to new data from the Central Bank of Libya. Food prices fell by 1.7% year on year, while housing costs were up by 30%.

  December 11, 2012

Economy:

• Background

  Libya: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	6.4	Population growth	1.7
  GDP (US$ bn; market exchange rate)	34.2	Real GDP growth	-15.5
  GDP (US$ bn; purchasing power parity)	49.1	Real domestic demand growth	-9.6
  GDP per head (US$; market exchange rate)	5,325	Inflation	7.4
  GDP per head (US$; purchasing power parity)	7,654	Current-account balance (% of GDP)	22.6
  Exchange rate (av) LD:US$	1.22b	FDI inflows (% of GDP)	3.2
  a Economist Intelligence Unit estimates. b Actual.

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  Background: Muammar Qadhafi led a coup against the king in 1969. He went on to nationalise the economy and established a new political system, known as the jamahiriya (republic of the people). During the 1980s and 1990s Libya was accused of involvement in international terrorism, and Western states and the UN imposed sanctions. After accepting responsibility for the 1988 Lockerbie bombing in 1999, Libya was gradually rehabilitated internationally, and by 2006 all sanctions had been lifted. In early 2011 a popular uprising quickly spread across the country. Colonel Qadhafi responded with extreme force, leading the UN to impose a no-fly zone and sanctions. With the help of NATO air power, anti-regime forces succeeded in ousting Colonel Qadhafi in late August 2011.

  Political structure: The General National Congress (GNC), an interim parliament, was elected in early July 2012 and took over power from the National Transitional Council in early August. Ali Zidan has been elected prime minister by the GNC. His government will manage the next phase of the transition process, which will culminate in a full parliamentary election, scheduled for late 2013. A new constitution will be put to a referendum ahead of the election.

  Policy issues: The previous government had been trying since the late 1990s to strengthen the economy, principally by moving it from a command to a market system. However, although foreign investment in the oil and gas sector has been strong, political machinations and sociopolitical concerns hampered progress elsewhere. Provided that post-Qadhafi administrations are able to maintain security and overcome political divisions, they are likely to pursue liberalisation with greater commitment than the previous regime.

  Taxation: Under Law 9 of 2010 on investment promotion, foreign companies are exempt from corporation tax for five years and from taxes on imports of equipment that is essential to the execution and operation of investment projects. The new government is likely to streamline the tax system but will continue to apply existing legislation in the interim.

  Foreign trade: We estimate that Libya's trade surplus recovered to US$34.1bn in 2012, from just US$3.9bn in 2011. We estimate that exports rose to US$52.2bn from US$15bn over the same period owing to a rebound in oil output, and that imports grew to US$18.1bn from US$11.2bn.

  Major exports 2009	% of total	Major imports 2006	% of total
  Hydrocarbons products (% share)	96.7	Machinery & transport equipment	49.3
  		Foodstuffs & livestock	12.7
  		Miscellaneous products	7.1
  		Chemical materials	6.9
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  Italy	21.5	Egypt	14.1
  Germany	13.5	Tunisia	10.8
  France	13.4	Turkey	7.4
  China	10.1	China	7.1

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  December 12, 2012

• Structure

  Libya: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 11, 2012

• Outlook

  Libya: Country outlook

  Libya: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The government of Ali Zidan took office in mid-November, completing the official transfer of power to an elected government, but political uncertainty remains high. The process of forming a new government has not been straightforward-Mr Zidan's predecessor, Mustafa Abu Shagur, was dismissed less than a month after he was first elected, following the rejection of his two proposals for a cabinet by the General National Congress (GNC). Security problems will continue to pose the greatest challenge to the new government, which will remain in place until a full parliamentary election is held. Under the interim constitution this is due to take place in late 2013, but the transition schedule has already slipped and the Economist Intelligence Unit expects further delays as the administration struggles to re-establish order and political rivalries impede effective decision-making. The success of the transition process will also depend on the government's commitment to wealth distribution and its ability to restore the state's capacity to provide Libyans with basic goods and services. Failure to meet high public expectations would probably lead to renewed social unrest over the forecast period.

  ELECTION WATCH: The GNC election was held in early July. Of 200 seats, 120 were allocated to independents on a simple-majority basis, and the remainder to party-list candidates on a proportional-representation basis. Mr Zidan was elected prime minister by the GNC on October 14th after his predecessor, Mustafa Abu Shagur, was ousted following only a brief stint in the post. Under the March 2012 constitutional declaration by the National Transitional Council (NTC), the GNC was, within one month of its first meeting on August 8th, to select a committee to write a new constitution. The draft would be completed within four months of the committee's first meeting and put to a referendum within a month of its completion. However, just days ahead of the GNC election the NTC announced that a 60-member constituent assembly would be elected instead, with the seats to be equally distributed between Libya's three regions. It is not yet clear whether the GNC will confirm the change. Under the constitutional declaration a full parliamentary election was scheduled to be held within 14 months of the GNC's first meeting (that is, by October 2013), but the timetable has already slipped, and further delays are likely.

  INTERNATIONAL RELATIONS: The attack on the US consulate in Benghazi during September was the most serious assault on a foreign target since the end of the war. The US dispatched a Marine anti-terrorist team, FBI investigators and two warships to the country. Libyan officials have strongly condemned the incident and made several arrests. Provided that the Libyan authorities demonstrate a strong commitment to protecting foreigners and restoring security, they will continue to receive political and financial support from the West. Of Libya's Arab neighbours, Qatar emerged as the most prominent supporter of the NTC during the crisis, providing it with military and financial assistance throughout the conflict. Since then, rumours that Qatar has funded Islamists in Libya have surfaced.

  POLICY TRENDS: The restoration of security and re-establishment of government operations will be key priorities and prerequisites for economic development. The collapse of the Qadhafi regime and the installation of a new administration have generated popular expectations of an improvement in living standards and the provision of public services, forcing the government to raise spending. Policy will focus on increasing public investment, stimulating job creation and promoting overall development. On the monetary front, the government is fostering the development of Islamic finance. In mid-May it issued an amended banking law, which for the first time includes provisions for Islamic banking, and in mid-November the GNC tasked several parliamentary committees with preparing a law to abolish conventional interest rates on banking loans, indicating a shift towards a more vigorous application of compliance with sharia (Islamic law). The medium-term priority will be to ensure that oil production remains on track.

  ECONOMIC GROWTH: Real GDP contracted by 61.4% in 2011, owing to the effects of the civil war, and we estimate that it rebounded by 91.2% in 2012 on the back of a recovery in oil output and exports. However, production has shown some volatility in recent months owing to sit-ins by oil sector workers, as well as operational constraints. According to the International Energy Agency, these include issues with pipelines and other equipment at some fields. We expect growth to average 9.6% a year in 2013-17. Global demand for Libyan crude oil could be boosted by the halt of Iranian oil supplies to EU member states since July. However, Libyan and Iranian oil have different properties and so will be difficult to substitute. Oil prices may experience some volatility over the forecast period owing to a high geopolitical risk premium and the downside risks associated with the possible collapse of the euro zone.

  INFLATION: Data from the Central Bank show that inflation averaged 14.5% in the first half of 2012, and we estimate that it will have averaged 4.8% for the full year. From 2013 inflation will be sustained by a revival in consumer demand and increased public spending. However, government subsidies will be maintained, which will ensure that prices for many staple goods are kept in check. In addition, the dinar's peg to the SDR and ample foreign-exchange reserves mean that the currency is unlikely to come under pressure. Inflation is forecast to average 3.5% a year in 2013-17.

  EXCHANGE RATES: The Libyan dinar is pegged to the SDR and tightly managed. In 2011 international sanctions prevented the Central Bank from selling foreign reserves, which resulted in a parallel market, but this has since been eliminated. The Central Bank remains committed to the peg and has indicated that the exchange rate will be fixed for up to three years. Libya's foreign-reserve stock of billions of US dollars will support the currency over the forecast period. We forecast that the US dollar, which is the most heavily weighted currency (41.9%) in the SDR basket, will remain strong against other major currencies in 2013-17. In addition, any decline in the value of the euro, which makes up 37.4% of the basket, should be adequately balanced by the strengthening of the dollar. We therefore expect the peg to remain in place throughout the forecast period.

  EXTERNAL SECTOR: The current account will continue to be dominated by hydrocarbons exports. We expect export earnings to rise from US$52.2bn in 2012 to US$81.9bn in 2017. Imports will pick up steadily over the forecast period, as consumer demand recovers and the government invests in reconstruction and, subsequently, in the development of new infrastructure. The most important element of the services account is oil sector payments abroad. We expect the services deficit to widen from 2012, as these payments recover in line with increased activity in the oil industry. The current transfers account will return to deficit in 2013, and the deficit will widen over the forecast period in line with rising outward remittances by foreign workers. As more international companies enter the market, increased profit repatriation will result in a growing income deficit. We expect the current-account surplus to average 23.2% of GDP a year in 2013-17.

  December 05, 2012

• Forecast

  Libya: Country forecast summary

  Country forecast overview: Highlights

  • The political situation will remain unstable throughout the forecast period. In the short term, post-Qadhafi governments will face the challenging tasks of restoring order and managing a process of political transformation. Under the interim constitution, a full parliamentary election is scheduled to be held seven months after a new constitution has been passed in a referendum.
  • We expect delays to the transition timetable as a result of security issues in the wake of the civil war and political disputes between rival factions. These are unlikely to be serious enough to derail the transition process altogether, but they will undermine the effectiveness of early post-Qadhafi governments.
  • Sporadic clashes between rival militias and attacks by militants are likely to continue in the early part of the forecast period, as the government struggles to exert its authority over the whole territory of Libya and to integrate militias into official security structures.
  • Early post-Qadhafi governments will face significant pressure from higher popular expectations of an improvement in living standards and the provision of public services. The government will adopt an expansionary fiscal policy focused on increasing public investment, boosting private-sector participation and stimulating job creation.
  • The Libyan economy contracted by 61.4% in 2011 as a result of disruptions to oil production and exports. Oil output has recovered rapidly since the end of the conflict and has already reached near pre-conflict levels. We estimate that the economy will have grown by 92.1% in 2012 and forecast growth to average 9.6% a year in 2013-17, as activity picks up in both the oil and non-oil sectors.
  • We expect that institutional issues and ongoing security problems will constrain the government in its ability to disburse funds, particularly on capital projects, in the early part of the forecast period. The fiscal surplus will narrow in 2013 and the account will fall into deficit in 2014 as expenditure rises. The deficit will narrow in 2016-17 in line with higher oil revenue.
  • We expect prices to have begun falling year on year in the latter part of 2012, owing to a helpful base effect and as supply disruptions associated with the conflict were resolved. As private consumption growth accelerates and government spending picks up, inflation will average 3.5% in 2013-17.
  • The current-account surplus will narrow over the forecast period as the economy recovers, resulting in widening deficits in services and current transfers. We expect the surplus to average 23.2% of GDP over the forecast period, with exports rising to US$81.9bn in 2017.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	92.1	11.3	9.0	8.6	9.1	9.9
  Consumer price inflation (av; %)	4.8	1.9	2.8	3.1	4.5	5.3
  Budget balance (% of GDP)	8.6	3.1	-0.3	-1.9	-1.3	-1.1
  Current-account balance (% of GDP)	35.7	29.3	26.3	23.2	20.2	16.9
  Exchange rate LD:US$ (av)	1.25	1.27	1.28	1.29	1.28	1.28
  Exchange rate LD:€ (av)	1.61	1.60	1.60	1.60	1.62	1.61

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  December 12, 2012

View detailed map

Country Briefing

Land area

1,759,540 sq km

Population

6.16m (2007 mid-year estimate, IMF)

Main towns

Population in '000 (2003 estimates, National Authority for Information and Documentation)

Tripoli (capital): 1,149

Benghazi: 636

Misurata: 360

Al Mirqab: 328

Al Bitnan: 142

Sebha: 126

Climate

Hot and dry with mild winters

Weather in Tripoli

Hottest month, August, 22-30°C (average daily minimum and maximum); coldest month, January, 8-16°C; driest month, July, 1 mm average rainfall; wettest month, December, 94 mm average rainfall

Language

Arabic

Measures

Metric

Currency

Libyan dinar (LD) = 1,000 dirham. Average official exchange rate in 2010: LD1.26:US$1

Time

2 hours ahead of GMT

Public holidays

Commercial offices and government establishments are closed on Fridays. Other than the usual Islamic celebrations, national holidays include Independence Day (December 24th); Evacuation Day (June 11th); and National Day (February 17th)

March 28, 2012