IMF Says Libya's Fiscal Path Unsustainable, Urges Urgent Adjustment

TRIPOLI, April 11 (Bernama-Xinhua) -- The International Monetary Fund (IMF) on Friday depicted Libya's current fiscal trajectory as "unsustainable" due to persistent high deficits and increasing pressures on the exchange rate, foreign reserves and inflation, Xinhua reported.

The assessment was published in a report on the agency's official website following its consultations with the Central Bank of Libya.

The report said Libya urgently needs fiscal policy adjustments, warning that continued high spending of oil revenues could deepen vulnerabilities, particularly if oil prices return to normal levels in the future, making expenditure adjustment more difficult.

Libya has significant economic potential, but current indicators point to growing risks in the balance of payments, particularly regarding foreign currency shortages, which could negatively affect citizens' living conditions, it added.

The report further stated that public spending has risen to unsustainable levels, with the budget deficit reaching around 30 per cent of GDP in 2025, while public debt has nearly doubled over the past two years to 146 per cent of GDP.

It also highlighted the persistent gap between the official exchange rate and the parallel market rate, although it has narrowed from previous peaks amid sustained strong demand for foreign currency.

The IMF said the gap continues to strain public finances and fuel inflation, eroding purchasing power and worsening living standards.

-- BERNAMA-XINHUA