Libya bankruptcy warning raises concerns

Libya has all the oil resources it needs to become the richest country per capita in North Africa but "if current trends continue, the nation of 6.5 million may well go bankrupt by 2018," according to a report

Libya bankruptcy warning raises concerns

 

World Bulletin/News Desk

According to a report by economic analyst Andrew Bauer from Revenue Watch Institute , a New York-based think tank,  Libya has all the oil resources it needs to become the richest country per capita in North Africa but "if current trends continue, the nation of 6.5 million may well go bankrupt by 2018."

Libyan government officials scrambled to dismiss the forecast but just a few days ago, the deputy governor of the Central Bank of Libya, Ali Salem, warned that Libya's overdependence on oil "could become a nightmare." Directly addressing the hopes of Libyans of an Emirate-style future, he cautioned at a seminar in Tripoli that Dubai's enormous wealth comes not just from oil, but is generated by a diversified economy, VOA reported.

Because of economic policies pursued during the 42 years of Col. Moammar Gadhafi's dictatorship, Libya lacks a diversified economy and has only a fledgling private sector. Half of all of those in the labor force are on the government payroll.

Bauer says the biggest immediate problem is a drastic fall in government revenues because of a months-long oil blockade by federalist militias who want semi-autonomy for eastern Libya. "Since the start of a series of blockades at oil fields and ports, revenues from oil, which represent over 90 percent of all government revenues, have plummeted." Oil exports are now less than 10 percent of what they were before the blockade began last July.

As result the government's budget deficit will exceed $4 billion in 2013 and more this year, if the blockade is not lifted soon, he says. On top of that government spending is rising rapidly with a 20 percent across-the-board salary hike for the country's 950,000 government workers and large increases in family allowances and food and housing   subsidies.

In addition, the government has been paying salaries to 200,000 people who registered as veterans of the uprising that toppled Gadhafi, despite the fact that most analysts believe the actual rebel fighting force was made up of no more than 25,000.

Last Mod: 25 Ocak 2014, 17:26
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