Tripoli, 12 July:
The Libyan economy will growing strongly this year and next much major structural challenges remain ahead, warned the International . . .[restrict]Monetary Fund in a report just published.
After shrinking 60 percent last year, the 116.6 percent rebound in economic growth this year, will settle to 16 percent in 2013, declining to 13 percent there year after, said the IMF.
The organisation’s mission which actually completed its report in May, warns: “The short-term challenges are to manage the political transition, normalise the security situation and exercise budget discipline, while maintaining macroeconomic stability”.
Because the country has strong foreign currency reserves, the new government will be able to afford increased spending for a while, concluded the IMF. However it goes on to caution that increases in wages and subsidies are eroding the tax take and the ability to produce balanced budgets.
“ Over the medium term, Libya needs to address issues including capacity building and improving the quality of education, rebuilding infrastructure, financial market development, reducing hydrocarbon dependence, and putting in place an efficient social safety net.
“It will also need to set up a governance framework linked to transparency and accountability that would promote private sector-led development, job creation, and inclusive growth.”
The IMF team noted that the Central Bank’s successful operations to reduce the money supply and restore the Libyan dinars value against the dollar. During the revolution, with its access to foreign currency frozen by sanctions,the Qaddafi regime resorted to printing dinars, while the currency’s value depreciated sharply on the black market.
In the four months to last March, the Central Bank used the equivalent of $3 billion to buy up a quarter of the dinars in circulation. The success of this operation was evidenced by the disappearance of the black market in foreign currencies.
The IMF expressed concern at unemployment, which on the basis of figures from the start of last year, they estimate at 26 percent. The economic team noted that the jobless figure was structural and was unlikely be tackled, if the economy returned to its re-revolution status, with a dominant state role.
It predicts that consumer price inflation will stay at around ten percent, but warns of bottlenecks in housing and transport.
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