ACCORDING to the economic outlook by the International Monetary Fund (IMF) for Libya, the country will have its strongest economic growth over the 2017-2018 two-year period, with a jump of 55% this year, and 31% in the next. Although very positive, one shouldn’t be deceived by this figure: since the fall of Gaddafi (2011) this North African country has lost about two thirds of its gross domestic product, which was worth 35 billion dollars, and this means, provided the IMF forecast comes true, that by the end of 2018 Libya will still have squandered just under half of its 2011 GDP.
And the current situation is even more dire if one considers a longer period of analysis. In 2008 Libya’s GDP reached an all-time high of 87 billion dollars, and at that time the Libyan Investment Authority, the sovereign fund created in 2006, and Lafico, a financial company of the Tripoli government, held significant positions in companies such as Unicredit, Finmeccanica, Fiat, and other companies listed on European exchanges.
According to IMF estimates, in 2017 the Libyan economy totalled 20,971 million Libyan dinars ($15 billion), a figure that should rise to about $20 billion by the end of this year. The country’s performance, which has allowed GDP to rise from its $10-billion low point of 2016, however, is saddled with runaway inflation, which this year may will reach 32%, having been close to a steady 30% over the last two years. And, as pointed out by the international organization, which is headed by Christine Lagarde, the reliability of data in a context of civil war is “low, especially with regards to medium-term projections.”
The recovery in oil exports has encouraged the recovery in gross domestic product; such upswing, however, is primarily contingent on global oil prices, which will not necessarily keep rising as they have over the past two years, and on the investments of large foreign companies, which won’t always be inclined to risk their capital amidst Libya’s unrest. Italy’s ENI, which is the biggest foreign company in the country, has, for instance, decided to reduce its production of crude oil. On more than one occasion the activity of the enormous Italian gas company, with its ubiquitous six-legged dog logo, has been stopped or slowed down in Libya due to attacks by militia bands that contend for control of the territory.
Conversely, the French company Total, decided to strengthen its presence in Tripoli, acquiring for 450 million dollars Marathon Oil Libya Limited, which holds a 16.33% stake in concessions at the Waha oil field in Libya. This acquisition - explained the Paris-based company - will allow access to reserves exceeding 500 million barrels of oil, with an immediate production of about 50,000 barrels of crude oil per day, and significant exploration potential over concessions that extend for 53,000 square kilometres in the Sirte oil basin.
Currently, Libyan oil production stands at 1.1 million barrels per day, a value much lower than the 1.8 million barrels achieved prior to 2011. The decline in Libya’s oil production has been a factor, among other things, which analysts indicate as having played a role in the recovery of the price of crude. In particular, crude oil futures were impacted by last December’s explosion at the oil pipeline that supplied the Sidra oil terminal. Following the attack, the details of which are still unclear, production at that pipeline, managed by Waha Oil, dropped to 60,000-70,000 barrel a day from 260,000 previously. Waha is a joint venture between the Libya’s state-owned company National Oil Corp (NOC), Hess, Marathon Oil and ConocoPhillips.