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Libya Enhances Regulatory Framework, Reflects Staff Recommendations

Tripoli, Libya - In a major step forward for economic stability and growth, the Libyan government has enhanced its regulatory framework to protect future generations’ share in the national wealth. The new law requires the Libyan Investment Authority (LIA) to invest abroad on a commercial basis, with a focus on low-risk assets.

Key Developments

  • The LIA is empowered to retain all its profits, without transferring them to the budget.
  • The Central Bank of Libya (CBL) has introduced 28- and 91-day certificates of deposit (CDs), established an overnight facility, and allowed banks to set their interest rates freely.
  • The CBL is working to enhance coordination with fiscal policy to limit liquidity injections.

IMF Welcomes Developments

The International Monetary Fund (IMF) has welcomed these developments, stating that they will help to strengthen Libya’s financial sector and promote economic growth. However, the mission has identified several areas for further improvement:

  • Need for a comprehensive sovereign asset management strategy
  • Need to deepen the financial market
  • Importance of promoting growth in the non-hydrocarbon sector

Challenges Facing Libya’s Banking System

The report highlights the challenges facing Libya’s banking system, including:

  • Improving credit culture and reducing dependence on foreign assets
  • Reforming state-owned banks and increasing transparency in their operations

Progress in Other Areas

The mission has commended progress in customs reform, but noted that more work is needed to:

  • Simplify tariffs
  • Speed up trade facilitation
  • Improve revenue collection

Additionally, the report calls for accelerated retrenchment of public employees and implementation of a comprehensive civil service reform.

Improving Economic and Financial Statistics

The IMF has urged the government to double its efforts to improve economic and financial statistics, including using the General Data Dissemination System (GDDS) framework. The mission emphasizes that reliable data is essential for effective policymaking.

Conclusion

Overall, the report concludes that Libya’s economy is showing promising signs of improvement, but that there are still significant challenges to be addressed in order to achieve sustainable growth and economic stability.