Libya: Economic recovery dependent on oil, but weakened by lack of reforms

The IMF forecasts robust economic growth for Libya in 2025 driven by oil, but warns that structural reforms are essential to avoid renewed vulnerability to global market shocks.

Share:

Gain full professional access to energynews.pro from 4.90$/month.
Designed for decision-makers, with no long-term commitment.

Over 30,000 articles published since 2021.
150 new market analyses every week to decode global energy trends.

Monthly Digital PRO PASS

Immediate Access
4.90$/month*

No commitment – cancel anytime, activation in 2 minutes.

*Special launch offer: 1st month at the indicated price, then 14.90 $/month, no long-term commitment.

Annual Digital PRO Pass

Full Annual Access
99$/year*

To access all of energynews.pro without any limits

*Introductory annual price for year one, automatically renewed at 149.00 $/year from the second year.

Libya, with its oil resources accounting for around 3% of the world’s proven reserves, could experience an economic recovery in 2025, supported by increased oil production. According to a statement released on April 16 by the International Monetary Fund (IMF) following a mission in the country, this recovery could translate into significant growth in Gross Domestic Product (GDP). In 2024, oil and gas continued to dominate the Libyan economy, accounting for nearly 68% of GDP, 97% of exports, and more than 90% of fiscal revenues, according to the African Development Bank (AfDB).

However, this outlook remains uncertain without a deep revision of economic policies and diversification of economic sectors. The IMF stressed that the country’s heavy reliance on hydrocarbons exposes Libya to risks associated with fluctuations in global oil prices and internal tensions, as demonstrated by recent violence at the Zawiya refinery. Political stability, still fragile, remains a crucial factor for sustained growth. Thus, while the AfDB projects a growth rate of 6.2% for 2025, this will largely depend on the stability of oil and gas prices and production.

The structural challenges of the Libyan economy

Despite the growth outlook, the IMF warns that Libya’s current economic situation remains too vulnerable to allow for effective diversification. The country suffers from weaknesses in non-hydrocarbon activities, a lack of financing, and ineffective regulation. This climate of uncertainty, coupled with sustained public spending, hinders the development of the private sector. Furthermore, the absence of reforms in key areas such as subsidies, governance, and support for the private sector undermines the economy’s effectiveness.

A call for fiscal and budgetary reforms

Long-term growth prospects for Libya remain closely tied to political and economic reforms. The IMF has stressed the need for significant budgetary reforms to stabilize public finances and ensure long-term economic viability. The international institution emphasized that it is crucial to reform the wage and subsidy system, as well as promote revenues outside the oil sector. These efforts would be essential for attracting foreign investments and increasing crude oil production, thereby strengthening the Libyan economy in the face of global challenges.

The United Kingdom is set to replace the Energy Profits Levy with a new fiscal mechanism, caught between fairness and simplicity, as the British Continental Shelf continues to decline.
The Italian government is demanding assurances on fuel supply security before approving the sale of Italiana Petroli to Azerbaijan's state-owned energy group SOCAR, as negotiations continue.
The Dangote complex has halted its main gasoline unit for an estimated two to three months, disrupting its initial exports to the United States.
Rosneft Germany announces the resumption of oil deliveries to the PCK refinery, following repairs to the Druzhba pipeline hit by a drone strike in Russia that disrupted Kazakh supply.
CNOOC has launched production at the Wenchang 16-2 field in the South China Sea, supported by 15 development wells and targeting a plateau of 11,200 barrels of oil equivalent per day by 2027.
Viridien and TGS have started a new 3D multi-client seismic survey in Brazil’s Barreirinhas Basin, an offshore zone still unexplored but viewed as strategic for oil exploration.
Taiwan accuses China of illegally installing twelve oil structures in the South China Sea, fuelling tensions over disputed territorial sovereignty.
Chevron has reached a preliminary agreement with Angola’s national hydrocarbons agency to explore block 33/24, located in deep waters near already productive zones.
India increased its purchases of Russian oil and petroleum products by 15% over six months, despite new US trade sanctions targeting these transactions.
Indonesia will finalise a free trade agreement with the Eurasian Economic Union by year-end, paving the way for expanded energy projects with Russia, including refining and natural gas.
Diamondback Energy announced the sale of its 27.5% stake in EPIC Crude Holdings to Plains All American Pipeline for $500 million in cash, with a potential deferred payment of $96 million.
Reconnaissance Energy Africa continues drilling its Kavango West 1X exploration well with plans to enter the Otavi reservoir in October and reach total depth by the end of November.
Nigeria’s Dangote refinery shipped 300,000 barrels of gasoline to the United States in late August, opening a new commercial route for its fuel exports.
Saudi and Iraqi exporters halted supplies to Nayara Energy, forcing the Rosneft-controlled Indian refiner to rely solely on Russian crude in August.
BW Offshore has been chosen by Equinor to supply the FPSO unit for Canada’s Bay du Nord project, marking a key milestone in the advancement of this deepwater oil development.
Heirs Energies doubled production at the OML 17 block in one hundred days and aims to reach 100,000 barrels per day, reinforcing its investment strategy in Nigeria’s mature oil assets.
Budapest plans to complete a new oil link with Belgrade by 2027, despite risks of dependency on Russian flows amid ongoing strikes on infrastructure.
TotalEnergies and its partners have received a new oil exploration permit off Pointe-Noire, strengthening their presence in Congolese waters and their strategy of optimising existing infrastructure.
India’s oil minister says Russian crude imports comply with international norms, as the United States and European Union impose new sanctions.
Strathcona Resources plans to acquire an additional 5% of MEG Energy’s shares and confirms its opposition to the company’s sale to Cenovus Energy.

Log in to read this article

You'll also have access to a selection of our best content.