Libya getting trapped into further debt amid fight for power

Libya may step into new debt if the war between UN-backed government and Libyan General Khalifa Haftar continues for a longer period.

Both the administrations have started spending more for the combat as fighters have been made public employees and public wage bill has soared.

Meanwhile, it is reported the eastern administration has sold bonds worth 35 billion dinars and it is outside the official financial system as the central bank funds just some wages to the parallel government and nothing more.

Despite all these the UN-backed government has an annual budget of 46.8 billion dinars and most of the funding is for public salaries and fuel subsidies.

International Monetary Fund data reveals the debt-to-GDP ratio of the country’s central government is 143 percent and with this Libya is now the most indebted countries in the world.

About 70 percent of the budget is allocated to fuel subsidies, public wages and other welfare benefits. A small portion which though small, but devoted to infrastructure is learned could be axed this time.

Apart from all these, the country has not spent on major infrastructural projects since 2011 when ruler Muammar Gaddafi was overthrown even though the roads, schools and hospitals are in need of acute restoration.


Lately Khalifa Haftar has confirmed a Alkarama patrol vessel has been dispatched to the eastern Ras Lanuf oil port as part of a training mission to secure oil. It was rumored to be a foreign navy ship.

Khalifa’s Libyan National Army received the vessel in 2018. It was earlier owned by a firm having address in the United Arab Emirates.

Meanwhile, LNA spokesperson said berthing of vessel has not affected oil exports and state oil firm NOC said since the toppling of Gaddafi in 2011 several Libyan warships had used the port.

Even though in recent years the eastern oil ports have been controlled by the LNA, the NOC runs oilfields as foreign buyers only wants to deal with the firm as been for decades.

Oil and gas exports are lifeline for the country and the Tripoli-based NOC has sought to stay out of the fight between eastern and western administrations.

The proceeds from oil and gas exports are handed over to Tripoli central bank, which also pays some public wages in LNA-controlled areas apart from mainly working with the Tripoli government.

Khalifa runs parallel administration and has set up its own state oil firm in an attempt to take over exports from NOC.

Meanwhile, NOC has condemned militarization of oil and gas infrastructure citing some incidents like army entering port of Es Sider, seizure of Es Sider airstrip, attempts made to requisition NOC tug boats and of course the recent berthing of warships in the Ras Lanuf terminal.

Eastern administration has sold bonds worth 35 billion dinars and it is outside the official financial system as the central bank funds just some wages to the parallel government and nothing more.

Talking about revenues the NOC reveals it rose to more than $1.5 billion last month, about 20 percent more from February.

However, the ongoing fighting between two administrations poses a serious threat to production of oil and gas.

NOC Chairman Mustafa Sanalia said, “The latest outbreak of hostilities … poses a serious threat to our operations, production and the national economy.”


LNA was earlier national military of Libya and was established after the end of first Libyan civil war in 2011 and defeat of of Libya’s previous national army.

libya lna

However, in 2014 LNA became a political faction after Khalifa launched a coup against the Libyan parliament. In 2015 Government of National Accord was established in Tripoli and it was internationally recognized too. It had its own Libyan Army and so the LNA was not part of Libyan military thereafter.


Oil sector accounts half of GDP and 97 percent of exports. It has the largest oil reserves in Africa. Other resources in the country are gas and gypsum and according to World Bank the country has an Upper Middle Income Economy.

The country imports up to 90 percent of cereal consumption requirements even though before 1958 agriculture was the main source of revenue for the country. With the discovery of oil in 1958 the size of agriculture sector declined and by 2005 it comprises less than 5 percent of GDP.

In the 1980s the country was one of the wealthiests with GDP higher than some developed countries.


The name Liba has been derived from Latin name that means region west of the Nile and this was due to its central location in North African. Coastal areas of the country were inhabited by Neolithic people as early as 8000 BC.

Libya gained independence on 24 December 1951 under King Idris but he faced a coup defeat in 1969 by rebel military officers led by Muammar Gaddafi.

The country experienced a full-scale revolt after the Arab Spring movements overturned rulers of Egypt and Tunisia. The revolt started in 2011. Gaddafi was captured and killed.

In 2012 people voted for the first time in about four decades in parliamentary elections.

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Paul Linus