Economy of Libya

Economy - overview: Libya's socialist-oriented economy depends primarily upon revenues from the oil sector, which contributes practically all export earnings and about one-quarter of GDP. These oil revenues and a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society. In this statist society, import restrictions and inefficient resource allocations have led to periodic shortages of basic goods and foodstuffs. The nonoil manufacturing and construction sectors, which account for about 20% of GDP, have expanded from processing mostly agricultural products to include the production of petrochemicals, iron, steel, and aluminum. Climatic conditions and poor soils severely limit farm output, and Libya imports about 75% of its food requirements. Higher oil prices in 1999 led to an increase in export revenues and helped to stimulate the economy. Following the suspension of UN sanctions in 1999, Libya has been trying to increase its attractiveness to foreign investors, and several foreign companies have visited in search of contracts.

The government dominates Libya's socialist-oriented economy through complete control of the country's oil resources, which account for approximately 95% of export earnings, 75% of government receipts, and 30% of the gross domestic product. Oil revenues constitute the principal source of foreign exchange. Much of the country's income has been lost to waste, corruption, conventional armaments purchases, and attempts to develop weapons of mass destruction, as well as to large donations made to developing countries in attempts to increase Qadhafi's influence in Africa and elsewhere. Although oil revenues and a small population give Libya one of the highest per capita GDPs in Africa, the government's mismanagement of the economy has led to high inflation and increased import prices, resulting in a decline in the standard of living.

Libya's gross domestic product grew in 2001 due to high oil prices, the end of a long cyclical drought, and increased foreign investment following the suspension of UN sanctions in 1999. Despite efforts to diversify the economy and encourage private sector participation, extensive controls of prices, credit, trade, and foreign exchange constrain growth. Import restrictions and inefficient resource allocations have caused periodic shortages of basic goods and foodstuffs.

Although agriculture is the second-largest sector in the economy, Libya depends on imports in most foods. Climatic conditions and poor soils severely limit output, while higher incomes and a growing population have caused food consumption to rise. Domestic food production meets about 25% of demand. The U.S. Government has prohibited the importation of Libyan crude oil into the United States since March 1982, as well as strict controls on U.S.-origin goods intended for export to Libya. On January 7, 1986, the U.S. imposed economic sanctions against Libya which broadly prohibit U.S. persons from engaging in unauthorized financial transactions involving Libya, including, in part, the following: the export to Libya of all goods, services, or technology; the import of goods or services of Libyan origin; engaging in the performance of a contract in support of an industrial, commercial, or government project in Libya; or dealing in any property in which the Government of Libya has any interest. The economic sanctions also prohibit U.S. persons from working in Libya.

Although United Nations sanctions were suspended in 1999, foreign investment in the Libyan gas and oil sectors has been severely curtailed due to the United States' Iran and Libya Sanctions Act[?] (ILSA), which caps the amount any foreign company can invest in Libya yearly at $20 million (lowered from $40 million in 2001).

GDP: purchasing power parity - $39.3 billion (1999 est.)

GDP - real growth rate: 2% (1999 est.)

GDP - per capita: purchasing power parity - $7,900 (1999 est.)

GDP - composition by sector:
agriculture: 7%
industry: 47%
services: 46% (1997 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 18% (1999 est.)

Labor force: 1.2 million (1997 est.)

Labor force - by occupation: services and government 54%, industry 29%, agriculture 17% (1997 est.)

Unemployment rate: 30% (1998 est.)

Budget:
revenues: $3.6 billion
expenditures: $5.1 billion, including capital expenditures of $NA (1998 est.)

Industries: petroleum, food processing, textiles, handicrafts, cement

Industrial production growth rate: NA%

Electricity - production: 16.92 billion kWh (1998)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 15.736 billion kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: wheat, barley, olives, dates, citrus, vegetables, peanuts; beef, eggs

Exports: $6.6 billion (f.o.b., 1998 est.)

Exports - commodities: crude oil, refined petroleum products, natural gas

Exports - partners: Italy 40%, Germany 17%, Spain 12%, France 4%, Sudan 4%, UK 3% (1997)

Imports: $7 billion (f.o.b., 1998 est.)

Imports - commodities: machinery, transport equipment, food, manufactured goods

Imports - partners: Italy 23%, Germany 12%, UK 9%, France 7%, Tunisia 5%, Belgium 4% (1997)

Debt - external: $4 billion (1998 est.)

Economic aid - recipient: $8.4 million (1995)

Currency: 1 Libyan dinar (LD) = 1,000 dirhams

Exchange rates: Libyan dinars (LD) per US$1 - 0.4687 (January 2000), 0.4616 (1999), 0.3785 (1998), 0.3891 (1997), 0.3651 (1996), 0.3532 (1995); official rate: 0.45 (December 1998)

Fiscal year: calendar year

See also : Libya