Despite the Central Bank’s recent infusion of emergency funds to the Government of National Accord (GNA), the Libyan people are increasingly losing faith in the government’s ability to provide for them. As the GNA struggles to address the escalating needs, it is looking to the private sector to fill the gaps. In this spirit, the State Council hosted a forum in Tripoli on 7 February to explore mechanisms for the non-state financing of development projects. This could be critical for Libya’s economic recovery and especially because the proposed 2017 budget includes inadequate investments in development, and has instead prioritised consumer subsidies and public sector salary payments.
Participants at the forum included representatives from: the State Council; House; Presidency Council; Libyan Central Bank; Audit Bureau; Administrative Control Authority; Ministry of Finance, Ministry of Planning, National Oil Corporation (NOC); Libyan Investment Authority (LIA); and Airports Authority. These participants emphasised that Libya needed to open up more opportunities for the private sector to expand its role in the country, and that the state and banking system should facilitate this. They encouraged the state to tackle corruption as a first step, as well as consider devaluing the Libyan Dinar. It will also be important to create more attractive contract terms — as well as more transparency regarding the bid process and payment guarantees — to encourage businesses to invest.
But the most significant barrier to private sector investment that was identified at the forum was the poor security situation. Finance officials have frequently been targeted for kidnapping and other militia intimidation to enrich these groups. Last week, the former central bank spokesman resigned from his position after he had been kidnapped twice. He also accused central bank’s senior leadership of trying to manipulate the institution’s relationship with the media.