Libya's economy: one oil account, counted four ways

Where Libya's public money comes from

The central bank's statement of revenue for 2025 runs to eight lines. Oil revenue was 99.6 billion dinars and oil royalties a further 17.2 billion. Taxes brought in 2.8 billion dinars, customs 345.5 million and telecoms 224.1 million. The bank's own profits added 2.7 billion and other revenue 14 billion, of which 12 billion came from a fee charged on foreign currency and was set aside for development projects. The eighth line, revenue from fuel sold on the local market, reads zero.

The African Development Bank put tax at 2% of total revenue in 2025. The World Bank's figures for 2024 give hydrocarbons 65% of GDP, 93% of exports and 72% of government revenue, and in 2025 the Congressional Research Service described the oil as providing nearly all of the state's revenue.

The same year looks different in dollars. The bank's annual bulletin, as the Libya Herald reported it in January 2026, recorded US$22.1 billion of oil revenue and royalties deposited in 2025 against US$31.1 billion of foreign currency used, a hard-currency deficit of about US$9 billion in a year whose dinar accounts balanced. The bank put the gap down to a fall in the oil revenue deposited with it from September, and covered it from the returns on its investments in deposits, bonds and gold. Its foreign assets stood at US$99.4 billion at the end of 2025, against US$95.5 billion a year earlier.

How oil replaced aid and farming

Output per head was about US$40 in the early 1920s. The kingdom that became independent in 1951 lived on foreign aid and on rent from British and American air bases. A twenty-year treaty of 1953 gave Britain bases in exchange for financial and military assistance, and an agreement of 1954 gave the United States base rights, Wheelus Air Base near Tripoli among them, in return for economic aid. Before oil, agriculture made up about 30% of GDP.

In 1956 the kingdom granted two American oil companies a concession of some 5.7 million hectares, and in June 1959 prospectors from Esso confirmed major deposits at Zaltan in Cyrenaica. The concession holders paid half their profits to the government in tax. Libya joined OPEC in 1962 and launched its first Five-Year Plan, for 1963 to 1968, and output per head had reached US$1,018 by 1967. Agricultural production fell over the same years, largely through neglect, and by 2005 farming accounted for less than 5% of GDP.

The officers who took power in 1969 founded the National Oil Corporation in 1970 and pressed the foreign companies on price. Early in 1971 the companies accepted a rise from US$0.90 to US$3.45 a barrel. British Petroleum's holdings were nationalised that December, and a controlling interest taken in the other companies in 1973 gave the state about 60% of domestic production by early 1974, later 70%. Between 1970 and 1974 output halved while revenue from oil exports more than quadrupled. Production touched an eleven-year low in 1975 and then held at about two million barrels a day.

What the Jamahiriya made of wages and trade

The oil paid for plans meant to outlast it. The Three-Year Economic and Social Development Plan of 1973 aimed at growth of 11% a year, weighted towards the non-oil sector. The Five-Year Economic and Social Transformation Plan for 1976 to 1980 was to put US$20 billion into activities that would keep earning once the petroleum was exhausted, with agriculture slated for the largest share. Two wheat projects, at Kufra and in the Jefara, irrigated from the aquifers beneath them, were abandoned in the late 1970s.

Until the late 1970s private enterprise kept a large role everywhere except oil, banking and insurance. Volume two of Gaddafi's Green Book, which appeared in 1978, called private retail trade, rent and wages forms of exploitation that should be abolished. Workers took over a large number of companies and turned them into state enterprises. A property law forbade owning more than one private dwelling, and state-owned "people's supermarkets" replaced retail and wholesale trading. By 1981 the state had restricted access to individual bank accounts so that it could draw on private funds for its projects. Under the Jamahiriya, state employment came to around 75% of the workforce and private commerce was banned.

Income fell again in the early 1980s, when Libyan crude was priced high and recession in the industrialised economies cut demand. The United States banned imports of Libyan oil in March 1982, and under the UN sanctions imposed in 1992 after the Lockerbie bombing the country's refining capacity eroded. Real growth averaged 2.6% a year through the 1990s.

After the sanctions were lifted in 2003 the authorities privatised more than 100 state-owned companies, in industries that included oil refining and real estate, and 29 of them became wholly foreign-owned. The Libyan Stock Exchange opened in 2007, and growth reached an estimated 10.6% in 2010. In the 2000s the energy sector generated about 95% of export earnings and 99% of government income, and the sovereign wealth fund, the Libyan Investment Authority, controlled about US$56 billion of assets, including more than 100 tons of gold held at the central bank. Billions in Gaddafi-era state assets remain frozen abroad under UN sanctions, the Congressional Research Service reported in 2025.

Who draws a salary from the oil

Salaries took 73.3 billion dinars of the central bank's 136.8 billion of spending in 2025, more than half of it. The IMF mission of April 2026 put the wage bill at around 30% of GDP. Of the 73.3 billion, 10.5 billion went out through the Instant Salary System, a payroll platform the IMF calls an important step toward transparency and control.

In the mid-2000s the government employed about 70% of all Libyan nationals in work, and the World Bank's assessment of 2026 counts the private sector at 14% of the workforce. Census figures put unemployment at 8% in 2008 and 21% in 2009. The BTI country report of 2026 attributes a fall to 18.74% to a strategy of creating public sector jobs, and the African Development Bank's outlook of 2026 gives 18.6% overall and 50.6% among the young.

Expatriates have made up an estimated fifth of the labour force, in skilled posts and in hard manual work. The census of 2000 found 20% of expatriate workers earning more than 300 dinars a month, against 12% of Libyan nationals. Before 2011 the Egyptian Ministry of Labour estimated that two million Egyptians were working in Libya, and the Egyptian Foreign Ministry later counted more than 800,000 who had gone home as attacks on Egyptian workers escalated. UN agencies identified more than 824,000 foreign migrants in the country as of March 2025, and the IMF's list of reforms for 2026 includes a legal framework for foreign workers.

The transfers reach further than the payroll. A 2021 mapping of social protection found the wives and children grant covering about 87% of the population, against 5% for the basic pension. The BTI report counts 23 social assistance programmes, with the largest share of their budget going to universal subsidies. In the first eight months of 2026, the World Bank estimates, wages rose by 25%.

What the state pays for fuel and electricity

Fuel is paid for from the subsidy chapter, which took 34.5 billion dinars in 2025 and also carries some public salaries and the spousal and child allowances. The Ministry of Oil and Gas and its affiliates received 16.8 billion dinars of it, the Ministry of Social Affairs 8.2 billion and the General Electricity Company 4.25 billion. The bank put spending excluding fuel at 120.0 billion dinars in 2025, against 123.2 billion in 2024, and the difference from its total for 2025 is the same 16.8 billion. In April 2026 the IMF put energy subsidies at about 20% of GDP and called their reform long overdue, to be paired with targeted social support.

The authorities ended an oil-for-fuel swap system in April 2025, and the World Bank expected the change to improve transparency and channel more revenue through the central bank. The BTI report of 2026 describes illicit markets for fuel and subsidised goods, cites the UN Panel of Experts on a supply monopoly among fuel distribution companies, and finds the smuggling of refined petroleum products by sea and land continuing at lower levels than in earlier years. In the first eight months of 2026 subsidy spending fell by 51% against the same months of 2025.

Electricity comes from the same hydrocarbons. All of it was generated from fossil fuel in 1998. The BTI report finds residential buildings using about 36% of the energy and describes the outcomes of a Renewable Energy Strategic Plan for 2013 to 2025 as unclear. In 2026 nationwide load shedding intensified from June and ended in a total blackout that disrupted water supplies, and amid widespread blackouts protesters briefly halted output at the Mellitah gas complex.

Why the dinar has a parallel rate

The dinar is pegged to the IMF's Special Drawing Rights basket, and the official rate has repeatedly valued it well above the parallel market. The World Bank's series has the official rate at 1.4 dinars to the US dollar in January 2020 against 4.2 on the parallel market, at 4.5 against 5.0 in July 2021, and at 6.3 against 8.4 in July 2026. The central bank devalued in April 2025 to narrow the gap and safeguard reserves, and again by 14.7% in January 2026. In April 2026 it sold US$2 billion to narrow the spread, and the premium still averaged 42% over the first half of the year.

The IMF attributes the gap to persistent excess demand for foreign currency, ties the pressure on the rate to large fiscal deficits, and wrote in April 2026 that exchange rate adjustment cannot substitute for fiscal consolidation. BTI writes that the gap has created arbitrage opportunities that feed corruption, and that it hinders trade and investment. In April 2026 the IMF also welcomed a decision to abolish the foreign exchange tax, asking for customs and excise duties on imports to replace it.

Inflation was 2.1% in 2025 by the World Bank's count and 1.6% by the African Development Bank's. Consumer prices then rose 11.1% year on year in the first half of 2026 as the weaker dinar and dearer imports fed through, and the World Bank reported episodic shortages of diesel, cooking oil and flour in the east and south, with quantity rationing in Tripoli during Ramadan.

The banks lend little. The IMF found credit to the private sector effectively restricted in 2026 to reduce pressure on foreign exchange, despite excess liquidity across the system, and the African Development Bank put non-performing loans at 19.3% in 2025. State-owned banks dominate the 16 commercial banks, and BTI describes long lines and withdrawal limits that promoted an informal, cash-based economy. Electronic payments grew by 186% in 2025, to 389 billion dinars.

Why the deficit depends on who counts it

Four institutions published figures for Libya's public finances in 2025, and they diverge most on the deficit.

For 2024 the spread is wider. The African Development Bank recorded a deficit of 24.8% of GDP, which it attributed largely to heightened spending in the eastern regions and to the shutdown of oil fields during the central bank dispute; the World Bank's table shows a surplus of 0.1% for the same year.

The IMF mission of April 2026 found "insufficient transparency regarding the composition and financing of the budget of the Eastern part of the country" and asked for regular fiscal reports covering extra-budgetary spending. The World Bank reports parallel and off-budget spending by competing authorities outside the central bank's oversight. Through 2025 the state ran on monthly allocations with no unified budget. In April 2026 the House of Representatives and the High Council of State agreed the first unified state budget since 2013, at 190 billion dinars, or US$30 billion and 62.5% of GDP, and the World Bank describes its monthly execution as opaque. It estimated a surplus of 9.4% of GDP for the first eight months of 2026 and a foreign exchange deficit of US$4.9 billion by August.

The two institutions that hold the money keep separate figures too. In October 2026 the Libya Herald was reporting a discrepancy between the oil revenues recorded by the National Oil Corporation and by the central bank up to 13 October, and a complaint from the corporation that the bank was withholding its budgets while production partners and international oil service companies went unpaid.

How fighting over the oilfields moves output

Proven reserves were 41.5 billion barrels in January 2007, up from 39.1 billion in 2006, with about 80% of them in the Sirte Basin, which supplied 90% of the oil produced. Output before the 2011 war was roughly 1.6 million barrels a day, nearly 70% of it through the National Oil Corporation. The economy shrank by 62.1% in 2011 and grew by 104.5% in 2012; the IMF's estimates for the same two years were a fall of 60% and a rise of 122%. By October 2012 production averaged more than 1.4 million barrels a day, after TotalEnergies, Eni, Repsol, Wintershall and Occidental returned.

From 2014 output followed control of the fields and the ports. Production fell to 900,000 barrels a day over four years of war, and by February 2015 revenue from oil was down by 90%. In June 2018 the Libyan National Army announced that the ports it held would be run by an eastern oil corporation; the international community affirmed that it would trade only with the corporation in Tripoli, and on 11 July the ports went back to it. In Britannica's account, control of the fields offered the Tobruk government "significant leverage", while Tripoli's depended on its international legitimacy and its ability to sell the oil abroad.

A blockade of the corporation by the Libyan National Army in January 2020 cut most of the country's production. The corporation counted losses of more than US$255 million in the six days to 23 January, and the blockade ended that September with an agreement to share the revenue. Tribal leaders from Ubari shut the El Sharara field on 18 April 2022 in protest against the government in Tripoli. In August 2024 armed forces in Tripoli put pressure on the central bank in an alleged attempt to make its governor resign, and the eastern authorities shut oil fields and terminals in response. Output averaged 1.09 million barrels a day that year; the World Bank put growth at 1.9% and the African Development Bank recorded a contraction of 0.4%.

For 2025 the corporation reported an average of 1.374 million barrels a day, its highest annual average in a decade, and 501 million barrels over the year, while the World Bank and the African Development Bank both worked from about 1.3 million. Two million barrels a day has been the stated aim three times. In 2006 the corporation hoped to raise output from 1.80 million to 2 million by 2008. Its website, read in October 2026, still sets out a plan to reach more than 2 million by 2025. The World Bank reports investment aimed at a capacity of 2 million by 2030, and projects 1.35 million for 2027 and 1.4 million for 2028.

What Libya grows and what it imports

Agriculture produced 1.9% of GDP in 2008 and employed around 6% of the active population, by the FAO's count, on land confined mostly to a strip along the Mediterranean and to desert oases watered from shallow wells. Before 2011 Libya imported 80% of its food and up to 90% of its cereals, and wheat flour, maize oil and milk made up about 40% of agricultural imports.

The 2018 harvest included 348,000 tonnes of potatoes, 236,000 of watermelons, 215,000 of tomatoes, 188,000 of olives, 176,000 of dates and 138,000 of wheat. About 170,000 farm holders worked the land in 2011, almost 40% of them full time, and close to 90% of farms were smaller than 20 hectares. Groundnuts made up about half of agricultural exports. Sheep numbered 5.1 million in 2008, and the herds rely heavily on subsidised imports of feed.

Libya relies almost completely on non-renewable groundwater. Of 5.83 cubic kilometres of water withdrawn in 2023, agriculture took 4.85 and groundwater supplied 5.55, against renewable resources of 0.70 cubic kilometres a year, a water stress of 817% by the FAO's measure; desalination produced 0.07 cubic kilometres. Water from the Great Man-Made River, which Libya's geography describes, was intended for farms first, and in the estimates the Middle East Institute cites a cubic metre cost 47 dirhams for agriculture against 80 for homes and 796 for industry. A 1% deduction from public wages helps to finance it.

Manufacturing accounted for 4.5% of GDP in 2008, and the country relies on cement imported from Egypt, Turkey and Tunisia. Tourism had reached 180,000 visitors in 2007, still less than 1% of GDP. The Ministry of Tourism counted 282,000 visitors in the first half of 2025, nearly 60% more than a year earlier, after an electronic visa was introduced in 2024.