Libya’s central bank governor, Sadiq Al-Kabir, told Bloomberg from the capital city of Tripoli that the war-torn OPEC country has to increase oil production to implement ambitious development plans and diversify an economy that is largely dependent on petroleum exports.
He characterised the country’s present output of 1.2 million barrels per day as insufficient to sustain increases in government spending should crude prices fall below $70 per barrel.
If we want to “make a shift in Libya’s economy,” the output must be at least 1.4 million barrels per day, he said.
“In solidarity with the international community and to fill the shortage in energy supplies caused by the Russia-Ukraine war,” he added, the bank supports the government’s attempts to increase output.
Kabir reported that this year, the NOC has collected almost $1.7 billion for unnamed development initiatives. The governor said that Libya would be able to “expand development and infrastructure projects, stimulate the private sector, and diversify the economy and sources of income” with more oil revenue.
Libya, which has the largest crude reserves in Africa but is stuck in a political impasse between the government in Tripoli and a rival prime minister who is supported by the parliament in the east, finds it difficult to increase production. Since Gaddafi was overthrown in 2011, energy fields, pipelines, and ports have been at the centre of a civil war that has lasted for years. These locations are frequently blockaded by armed groups or protesters with unmet political or economic demands.
The enormous nation’s outdated energy infrastructure has also been a problem. Long requesting financing for a significant overhaul, the state-run National Oil Corp. underwent a dramatic shift in leadership during the previous oil crisis that ended in July.
The rift between the Tripoli-based administration and parliament this year, according to Kabir, has hampered efforts to reunite the central bank; nevertheless, they may begin “as soon as political stability returns, even if only relatively.”
Despite calls from some Libyans for measures to make the dinar stronger against the US dollar and lower import costs, “the prevailing political and economic conditions make it difficult for the central bank to reconsider the exchange rate, especially in light of the constant and repeated threats to shut down oil production and exports,” according to the central bank.