The state oversight agency, the Administrative Control Authority (ACA), issued two decisions Wednesday, one of which could be labelled as a brave decision politically.
The first decision (Circular No. (1) of 2025) suspends the ‘‘appointment and contracting to fill positions in public entities until they are reconsidered in accordance with the provisions of the legislation in force’’.
The ACA said this decision comes on the back of its 2023 Annual Report (No. 53), noting the increasing number of public sector employees.
Suspension of student scholarships
The second decision suspended the issuance of decisions to send students abroad or inside Libya on fully paid state scholarships ‘‘until all financial obligations towards the Ministry of Higher Education and Scientific Research are settled”.
Again, the ACA said this comes on the back of its observations in its 2023 Annual Report (53) regarding the expansion of the Ministry of Higher Education and Scientific Research in the current Tripoli based Libyan government, and the ministries that preceded it, in issuing decisions on study scholarships, arranging financial obligations towards the state, and entering into disputes and judicial rulings that the Public Treasury was unable to implement.
Analysis: A brave political decision?
The decision could be seen as a brave political decision by the ACA. It could lead to a clash with the Tripoli government. Libyan governments, like most governments across the world, rely on their power to appoint people to gain and keep political support and loyalty. Suspending this power weakens them.
On another level, Libya has struggled to create private sector jobs in view of the centralised, socialist, welfare, rentier state legacy. The only employment solution for the government regarding the thousands of youth and university graduates every year is state job appointments.
This has, of course, overloaded the state sector with no relative return in productivity. In fact, it has sent the negative signal to youth that it is easier to get a secure state sector job where they can (virtually) never get sacked than work hard in the private sector.
State sector job appointments are a political and social solution for Libyan governments. The outlook for governments has been that it is better to overburden the state coffers with unproductive state appointments than have disgruntled unemployed youth.
Hence, it will be interesting to see the reaction of the Libyan government to these ACA decisions. They have the option to politically blame the ACA for lack of appointments or ignore the decision and continue to make appoints. They can do this while benefiting from the savings made by reducing, or limiting, the money spent on the payment of state sector salaries. This is money that the government can spend more productively on a long list of sectors.
Solutions
The real solution would be for the government to first, reform the education/university system to graduate students to meet the needs of the Libyan job market. Secondly, the government needs to reform the economy. It needs to walk the walk and not just talk the talk of private sector, enterprise and reducing the role of the dominant, rentier-driven state sector.
The budget cost of state sector employees
There is no doubt that the number of state sector employees is unsustainable and acting as a drag on the Libyan economy as reflected in their cost in the budget.
Central Bank of Libya statistics on the economy for 2024, released this week, showed that: Total revenues in 2024 amounted to 123.5 billion dinars and total spending in 2024 amounted to 123.2 billion dinars – leading to a surplus of about LD 300 million.
But they show a total state sector salaries spending amounting to 67.6 billion dinars and spending on state subsidies amounting to 16.1 billion dinars. However, spending on development/projects in the budget amounted to only 22 billion dinars – about a third of spending on state sector salaries.
