12 March 2025: Libyan economy continues to face challenges amid $2.5 billion deficit
This week we look at latest CBL figures which show a growing USD deficit, as well as the Russian Deputy MoD visiting Haftar in Benghazi and the NOC unveiling further details for the bidding round.
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Libyan economy continues to face challenges as CBL figures for 2025 reveal $2.5 billion deficit
Incident: On 6 March, the Central Bank of Libya (CBL) published its monthly public revenue and expenditure statement, which covers the period from 1 January to 28 February 2025.
Usually, the CBL publishes figures every month, but this was the first report for 2025. According to the report, Libya received a total of 18 billion LYD in income, of which 14 billion LYD was from oil sales revenue and 3.7 billion LYD was from oil royalty revenues. Total expenditure in the period was 8.4 billion LYD of which 5.9 billion LYD was on Salaries (Chapter One), 35 million LYD on Operating Expenses (Chapter Two), and 2.5 billion LYD was on Subsidies (Chapter Four). There was no spending on Development (Chapter Three) or Emergencies (Chapter Five). Although this seems to give a total surplus of around 12 billion LYD, the salaries expenditure only covered January salaries, as February salaries were only paid a few days into March.
The total use of foreign exchange in the reporting period is 6.118 billion USD, of which 58 million USD is through the CBL (including for overseas salaries, medical treatment, the NOC, and GECOL among other things) and 5.54 billion is through commercial banks including 2.36 billion USD on Letters of Credit and 2.97 billion USD on personal items. The CBL noted that the oil revenues supplied to the CBL in February witnessed a relative decline, amounting to 1.6 billion USD, while January revenues amounted to nearly 2 billion USD, a total of around 3.6 billion USD. As such, the foreign currency deficit in the period was 2.5 billion USD.
The CBL has continued to focus on efforts to address liquidity shortages and to push for a unified budget to be agreed.
On 9 March, the CBL Governor Naji Essa held a meeting with the directors of commercial banks and relevant CBL department directors where they discussed the implementation of policies regulating the sale of foreign cash in order to protect the value of the Dinar, strengthening electronic payments, and ensuring the availability of liquidity for all citizens, especially during Ramadan. Essa issued instructions to reduce the value of commissions imposed on bank card usage at points of sale to a maximum of 1% and agreed to provide the cash advance feature through electronic points of sale, which gives citizens broader options to obtain liquidity easily.
On 10 March, Essa met with UN SRSG Hanna Tetteh discussing the most important efforts of the CBL in maintaining financial and economic stability in the country despite the many risks and challenges. According to the CBL, Tetteh praised the key role played by the CBL in pushing for a Unified Budget Law, which is of utmost importance to the stability and future of the country. She also praised the successes achieved by the new CBL administration in eliminating the cash flow crisis and expanding electronic payments, emphasizing the need to keep this important sovereign institution away from political attractions and support its journey toward real economic reform.
Separately in a meeting between Tetteh and NOC Chairman Masoud Suleiman on 3 March, Tetteh emphasised the critical need for the NOC to uphold transparency and accountability in its operations and contracting processes. She also welcomed the decision to discontinue crude oil-for-fuel transactions and encouraged further measures to restore public trust in this vital pillar of Libya’s economy.
Comment: According to the NOC, just over 10 billion USD was spent on the barter system in 2024. In February, Suleiman reportedly instructed the NOC’s Marketing Department to stop using the barter method and return to working using the method of selling crude oil and buying fuel starting from March. Suleiman has warned of the risks of fuel shortages unless the necessary funds to pay for the imports are secured.
During the CBL reporting period, cash liquidity amounting to 16 billion LYD was distributed through commercial banks across the country and 24.7 billion LYD worth of transactions were processed through the electronic clearing system. The numbers of Points of Sale (POS) reached 83,566 from 76,356 in 2024 and the total trading volume through the POS reached 3.8 billion LYD in the period. The value of transactions via mobile phone apps was 60.6 billion LYD.
There are various reasons for Libya’s liquidity shortage, but the key driving factors are Libya’s cash-based economy and society, lack of trust in the banks which means many Libyans tend to save their cash at home, and the bloated public sector system where everyone is paid at the same time (and therefore wants to withdraw their cash at the same time). Despite international pressure around the need for a unified budget to rein in public spending, there has been no real progress on this front.
Significance: Despite CBL efforts to improve transparency and address the liquidity challenges, Libya’s current economic reality is that the books do not balance, with the country’s growing foreign currency deficit likely to have significant economic, political and potentially security repercussions in the coming period if it is not addressed. Given the CBL figures did not include February salaries, the LYD surplus is likely to be much lower than 12 billion LYD.
Meanwhile, the 2.5 billion USD deficit is concerning given this only covers a two-month period. Combined with the existing deficit of 5.2 billion USD from 2024, this means a deficit of at least 7.7 billion USD though it is likely much higher – there is a lack of clarity over the deficit levels from previous years. Furthermore, if the NOC succeeds in removing the barter system this month as it says it intends to do, the foreign currency deficit is likely to increase.
Although the CBL has improved access to card payments, e-payments and the domestic clearing system to try to improve access to liquidity and prevent the devaluation of the Dinar, this process has a long way to go. As such, liquidity shortages, rising prices and the devaluation of the Dinar are likely to remain key monetary issues in the short-medium term.
Meanwhile, the divisive political situation and the deep-rooted corruption and patronage networks which characterise the Libyan economic landscape mean that progress on agreeing a unified budget will realistically require tangible pressure to be exerted, for example in the form of access to funds being cut off or sanctions being implemented. Such action remains unlikely anytime soon. Instead, it is more likely that the increasing economic pressure will result in increased instability and conflict among rival parties seeking access to the state’s coffers.
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Russian Deputy MoD Yevkurov visits Benghazi again
Incident: On 6 March, Russian Deputy Minister of Defence (MoD) Yunus-bek Yevkurov arrived at Benghazi-Benina International Airport. He was received by the Secretary General of the LNA Khairi al-Tamimi and the Russian ambassador in Libya Aydar Aganin, as well as by several other senior LNA officers. On 7 March, Yevkurov, who is a Muslim, attended Friday prayers at a Mosque in Benghazi together with al-Tamimi. On the same day, Yevkurov met with LNA Commander Khalifa Haftar in al-Rajma, who informed him about the current political and security situation in Libya.
NOC provides additional details on Bidding Round and begins Roadshow in Houston
Incident: After the announcement of the new bidding round (BR) by the National Oil Corporation (NOC) last week, it has launched the official BR website with further information. The GNU Ministry of Oil and Gas (MOOG) called the new BR ‘a milestone’ representing ‘a significant investment opportunity aimed at enhancing Libya’s oil and gas reserves and production potential’. According to the BR website, the BR will cover 22 exploration zones, with a variety of exploration opportunities, namely: 11 onshore blocks in Ghadames, Murzuq, and Sirte Basins, known for their abundant reserves, and 11 offshore blocks in Sirte Offshore, Sabratha Basin, and Offshore Cyrenaica, which hold vast untapped resources.
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Russian Deputy MoD Yevkurov visits Benghazi again
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