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- GDP (PPP):
- $97.6 billion
- -24.0% growth
- 2.0% 5-year compound annual growth
- $15,706 per capita
- Inflation (CPI):
- FDI Inflow:
Libya’s economic freedom remains unrated due to a lack of reliable data. The government’s compilations of official economic data are inadequate, and data on Libya in many of the international sources relied upon for Index grading are incomplete. Libya’s economic freedom will be ranked in future editions when more reliable information becomes available.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: Not Graded
- Economic Freedom Status: Not Graded
- Global Ranking: Not Ranked
- Regional Ranking: Not Ranked in the Middle East/North Africa Region
- Notable Successes: N/A
- Concerns: N/A
- Overall Score Change Since 2012: N/A
Libya’s economy is at a critical juncture as security deteriorates and sectarian tensions deepen. With the state’s legitimacy eroding, the government confronts the daunting challenge of stabilizing the macroeconomic environment in the midst of political turmoil. The economic infrastructure is significantly degraded, and economic uncertainty remains very high.
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. Oil and natural gas provide about 80 percent of GDP, 95 percent of export revenues, and 99 percent of government revenues. Economic recovery began in 2012, but political instability, factional clashes, and security threats from Libyan followers of the Islamic State in Iraq and Syria (ISIS) are serious deterrents to growth. The government faces major challenges in disarming and demobilizing militias, improving the rule of law, and reforming the state-dominated economy.
In the absence of an effective national government, pervasive corruption continues in both the private sector and the government. The fall of the Qadhafi regime initially raised hopes that the level of graft would decline, but oil interests, foreign governments, smuggling syndicates, and armed groups still wield undue influence. The role of the judiciary remains unclear without a permanent constitution.
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. Large oil revenues have funded excessive government spending in the past. Instability and a weak central government continue to hamper the effective management of public finance.
Regulatory efficiency is severely undermined by ongoing political instability. The labor market remains destabilized, and the large informal sector is an important source of employment. Sharply decreased revenues from lower oil prices and increased payments for state salaries and subsidies on fuel and food led to an estimated budget deficit of about 50 percent of GDP in 2014, up from about 4 percent in 2013.
Libya has a 0 percent average tariff rate. Regulatory barriers interfere with trade. The government screens new foreign investment. State-owned enterprises distort the economy, and political instability undermines international trade and investment. The financial system is hampered by unstable political and economic conditions, and limited access to financing severely impedes any meaningful private business development.