## IMF Staff Concludes Visit to Libya

_IMF News, December 9, 2024_

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## Bibliographic details
- Published: December 9, 2024

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### Mission summary
- IMF staff team led by Mr. Dmitry Gershenson visited Tunis, Tunisia, during December 2–6, to discuss Libya’s latest economic developments, the macroeconomic outlook, and the country’s policy and reform priorities.
- End-of-Mission press release date: December 9, 2024.
- The mission will not result in a Board discussion; views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
- The mission welcomes the agreement to resolve the dispute over the leadership of the Central Bank of Libya (CBL), noting the appointment of a new governor and a new Board of Directors as a positive milestone after a decade of Board inactivity.

### Macroeconomic outlook and risks
- Staff and authorities are in broad agreement on recent macro developments and outlook.
- Following the disruption in oil production in August and September:
  - Projected GDP growth and the fiscal and external balances for 2024 have been revised down.
  - The GDP growth forecast for 2025 has been revised up to reflect the expected rebound in oil production.
  - Medium-term projections remain broadly unchanged.
- IMF staff’s baseline forecast is subject to downside risks, including lower-than-expected oil prices and renewed political tensions, which could limit available fiscal space.

### Fiscal policy and budget
- It is critical for the authorities to agree on spending priorities through an approved unified budget for 2025.
- An approved unified budget for 2025 would help avoid pro-cyclical spending and improve the management of Libya’s resources.
- Controlling fiscal expenditure remains the preferred policy approach consistent with Libya’s current macroeconomic framework.

### Monetary policy, foreign exchange, and banking
- Staff support the CBL’s efforts to facilitate access to foreign exchange and alleviate shortages of local currency.
- Recent CBL actions reported:
  - The foreign exchange tax was reduced from 27 to 15 percent.
  - The central bank raised limits on letters of credit and on allowances for personal use.
  - Steps were taken to regulate activities of foreign exchange bureaus.
- Exchange rate developments:
  - The gap between the official (plus tax) and the parallel exchange rates narrowed from 13 percent in July to 8 percent in November.
- CBL is addressing local currency shortages by injecting liquidity into the banking system and expanding electronic payment services.
- The banking sector has been raising capital in line with CBL guidelines.
- Staff discussed the importance of developing monetary policy tools to help the central bank safeguard the efficient functioning of the foreign exchange market.

### Structural reforms and governance
- Staff reiterated the need for structural and subsidy reforms.
- Governance reforms across the public sector were discussed; a planned comprehensive review of governance for the 2025 Article IV could serve as a foundation.
- Energy subsidies currently account for around 20 percent of GDP; reforming these untargeted subsidies remains on the authorities’ agenda because they drain resources and limit spending on productive sectors.
- Medium-term objective: diversification away from hydrocarbons while promoting stronger and more inclusive private sector-led growth.
- Continued progress welcomed on enhancing governance of the banking sector and the AML/CFT framework, improving data collection, and encouraging fintech innovation.

### Capacity development and next steps
- The IMF is committed to offer capacity development (CD) in areas as needed.
- In 2024, CD has been provided in the areas of tax policy, budget preparation and revenue administration.
- Planned CD activities will focus on national accounts, consumer price index, reserve management, and monetary policy.
- The next Article IV mission is expected in April 2025.
- The mission thanks the Libyan authorities and other counterparts for their hospitality, constructive policy dialogue, and productive collaboration.

*Source: IMF staff end-of-mission press release, December 9, 2024.*

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## References

- [Libya and the IMF](http://www.imf.org/external/country/LBY/index.htm)
- [Tunisia and the IMF](http://www.imf.org/external/country/TUN/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/12/06/pr24453-libya-imf-staff-concludes-visit_