We specific our deepest condolences to the folks of Libya for the tragic lack of life and widespread devastation attributable to flooding in September; The introduced central financial institution reunification has led to welcome enhancements in banking supervision and financial coverage coordination. It’s going to additionally assist with shifting the reform agenda ahead; Libya urgently wants a transparent financial imaginative and prescient and technical help help. The IMF helps Libyan authorities by offering capability improvement in a number of areas.
A workers workforce from the Worldwide Financial Fund (IMF) led by Mr. Dmitry Gershenson visited Tunis, Tunisia, throughout November 13-16, 2023 to debate Libya’s financial and monetary developments, the macroeconomic outlook, and the nation’s coverage and reform priorities. On the conclusion of the go to, Mr. Gershenson made the next assertion:
Regardless of the devastating floods, Libya’s medium-term financial outlook stays constructive as a result of projected excessive oil costs. Though estimates of the harm as a result of floods are usually not accessible but, the affect of the catastrophe on measured GDP is more likely to be comparatively small provided that Libya’s economic system is basically depending on oil and gasoline manufacturing. The medium-term financial outlook stays constructive on the again of excessive projected international oil costs.
There may be an pressing want for a transparent financial imaginative and prescient for the nation. Within the quick time period, Libya requires a funds to help coverage credibility, as a result of untargeted fiscal spending complicates the implementation of the macroeconomic coverage. Within the medium time period, the nation wants an financial technique to diversify away from hydrocarbons and to foster stronger and extra inclusive non-public sector-led development. Lowering untargeted subsidies would free the assets for better-targeted social spending and productive investments. In the long term, structural reform efforts ought to deal with strengthening establishments, upgrading the anti-money laundering combatting the financing of terrorism (AML/CFT) framework, and addressing corruption and governance issues.
We welcome the reforms undertaken by the Libyan authorities this yr. There was notable progress in the direction of enhancing information assortment, enhancing the AML/CFT framework, fintech innovation, and aligning banking supervision with worldwide requirements and greatest practices. The not too long ago established Excessive Monetary Oversight Committee with illustration from the East and the West to allocate fiscal assets is an enchancment however must finally evolve in the direction of a budgetary course of consistent with international greatest practices.
The not too long ago introduced reunification of the central financial institution is a step in the proper path. The fast profit stemming from the August announcement is improved coordination within the areas of financial coverage, banking system liquidity and supervision. The subsequent steps ought to embrace integrating the fee system and unifying the central financial institution’s organizational construction, and accounting procedures earlier than full reunification might be achieved.
Libya wants technical help help, and the IMF helps authorities by offering capability improvement in a number of areas, together with public monetary administration, financial and monetary statistics, nationwide accounts, tax, customs, and worth statistics. Future capability improvement actions embrace tax programs, monetary sector supervision and regulation, stability of funds statistics, and AML/CFT. Nevertheless, progress in addressing Libya’s short- and medium-term challenges—together with by modernizing fiscal and financial coverage frameworks—will, to a big extent, rely upon the tempo of political reconciliation.
The subsequent Article IV mission is predicted within the Spring of 2024.
The mission thanks the Libyan authorities and different counterparts for his or her hospitality, constructive coverage dialogue, and productive collaboration.
Distributed by APO Group on behalf of Worldwide Financial Fund (IMF).