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- GDP (PPP):
- $92.6 billion
- -6.4% growth
- -0.3% 5-year compound annual growth
- $14,650 per capita
- Inflation (CPI):
- FDI Inflow:
The level of economic freedom in Libya remains unrated because of a lack of reliable comparable data. Official government compilations of economic data are inadequate, and data reported by many of the international sources relied upon for Index grading remain incomplete.
Economic recovery since the overthrow of Muammar Qadhafi’s regime has been fragile. Political instability, factional clashes, and security threats from domestic and foreign followers of the Islamic State are significant constraints on economic growth and meaningful development. The government faces major challenges in disarming and demobilizing militias, enforcing the rule of law, and reforming the state-dominated economy.
Dictator Muammar Qadhafi was overthrown in 2011, and political upheaval continues to this day. In June 2014, Libya held its second parliamentary election since the fall of Qadhafi; in November, the Supreme Constitutional Court ruled that the elected parliament was constitutionally illegitimate. Pro-Islamist militias allied with the Muslim Brotherhood have established parallel institutions. In March 2016, the U.N. brokered the establishment of a national unity government in Tripoli to replace the two rival administrations. Oil and natural gas provide about 80 percent of GDP, 95 percent of export revenues, and 99 percent of government revenues. Extremists have attacked oilfields and seized oil infrastructure, threatening government control of oil and gas revenues.
Libyans have the right to own property and can start businesses, but regulations and protections are not upheld in practice. The World Bank’s 2015 Doing Business report ranked Libya 188th out of 189 economies surveyed. Businesses and homes have been confiscated by militants, particularly in Libya’s eastern regions and in Benghazi. Without a permanent constitution, the role of the judiciary remains unclear. Corruption is pervasive.
The top income tax rate is 10 percent, but other taxes make the top rate much higher in practice. The top effective corporate tax rate is 20 percent. Taxation has not been enforced effectively since early 2011. Government spending has amounted to 74.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 32.9 percent of GDP. Public debt is equivalent to 65.4 percent of GDP.
The existing regulatory framework is severely undermined by ongoing political instability and turmoil. The labor market remains destabilized, and the large informal sector is an important source of employment. Fearful of exacerbating social unrest, the central bank uses its large stock of foreign reserves to operate as a de facto ministry of finance, funding subsidies in the absence of a unified government.
Trade is extremely important to Libya’s economy; the value of exports and imports taken together equals 137 percent of GDP. Political instability is a major impediment to foreign trade and investment. The financial infrastructure has been significantly degraded by unstable political and economic conditions. Limited access to financing severely impedes any meaningful private business development.