Economic Analysis - Persistent Shortfalls To Be Covered By Domestic Borrowing, Foreign Reserves - NOV 2017

BMI View: Libya ' s budget balance will remain in deficit over the years ahead, as elevated instability prevent oil output from reaching the levels needed to cover still-large public sector wage and subsidy bills. With few other options available, authorities will continue to fund fiscal shortfalls through the issuance of domestic debt and depletion of international reserves .

Libya will continue to record fiscal deficits over the coming years. Instability and below-potential oil output - a key source of state earnings - will limit the government's revenue-raising abilities. At the same time, public spending on wages and subsidies will stay elevated due to their social and political sensitivities. The budget shortfall will nevertheless start to reduce from 2017 onwards, as oil production gradually ticks up. Authorities will fund deficits through a combination of domestic debt issuance and the use of still-large - but rapidly diminishing - reserves built up over the years prior to the H214 oil price plummet.

Revenue Streams Still Constrained

Persistent Instability Continues To Weigh On Fiscal Position
Libya - Fiscal Position
e/f = BMI estimate/forecast. Source: BMI, IMF

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