By Ayman Amzein.
Benghazi, 26 June 2013:
The proposed phasing out of subsidies could save Libya more than LD 3 billion a year, . . .[restrict]according to the chairman of the GNC Finance Committee, Abdul-Salam Naseya.
The congressman said that an informal study has shown that around a third of Libya’s subsidised food items and fuel is being smuggled into neighbouring countries.
Since the total value of subsidies on basic food commodities and fuel in this year’s budget is LD 10.6 billion – LD 8 billion of which is being used to subsidise fuel – if the smuggling can be stopped, the economy could be more than LD 3 billion better off.
Libya is currently looking to remove subsidies on basic food items and fuel in return for cash support for citizens, by the end of August this year. The cash could apparently reach up to about LD 130 per month.
Naseya also commented on the concerns some economists have voiced that such a move could send inflation rocketing, and produce rising numbers of cash-strapped citizens.
The GNC, Naseya said, has put two obligations on the government, headed by Ali Zeidan. “The first is the activation of the national number before 30 August 2013 and the second is to provide a comprehensive project to remove subsidies support,” Naseya said.
He also pointed out that lifting the subsidies would “not be implemented all of a sudden.” Oil Minister Abdulbari Ali Abdel-Hadi Al-Arusi, for example, said last month that fuel subsidies would be phased out over a three-year period.
Naseya said: “The removal of subsidies on basic food commodities, such as flour, oil and sugar is much easier than the removal of subsidies on fuel.” He pointed out that the removal of subsidies on fuel could spark a reaction, as it did in Jordan last year, and would also have a direct impact on the transport sector and the work of foreign companies. [/restrict]