Libya's socialist-oriented economy depends primarily upon revenues from the petroleum sector, which contributes practically all export earnings and over half of GDP. These oil revenues and a small population give Libya one of the highest per capita GDPs in Africa. Since 2000, Libya has recorded favourable growth rates with an estimated 8.1% growth of GDP in 2006.

Macro-economic trend

The GPA per capita of Libya soared by 676% in the 1960s and a further 480% in the 1970s. However such fantastic growth rates proved unsustainable in the face of global oil recession and international sanctions. Consequently the GDP per capita shrank by 42% in the 1980s. Successful diversification and integration into the international community helped current GDP per capita to cut further deterioration to just 3.2% in the 1990s.

Below is a chart of trend of gross domestic product of Libya at market prices estimated by the International Monetary Fund with figures in millions of Libyan dinars (LYD).

Year	GDP	USD to LYD	Inflation Index (2000 = 100)
1980	10,882	0.29 LYD	25
1985	8,227	0.29 LYD	45
1990	8,185	0.28 LYD	57
1995	10,679	0.34 LYD	89
2000	17,668	0.51 LYD	100
2005	50,693	1.22 LYD	80

Notes:
1. For purchasing power parity comparisons, the US Dollar is exchanged at 0.77 Libyan Dinars only.

Average wages in 2007 hover around $53-65 per day.

Oil Sector

Libya is an OPEC member and holds the largest proven oil reserves in Africa (followed by Nigeria and Algeria), as of January 2007, up from in 2006. About 80% of Libya’s proven oil reserves are located in the Sirte Basin, which is responsible for 90% of the country’s oil output. The state-owned National Oil Corporation (NOC) dominates Libya's oil industry, along with smaller subsidiaries, which combined account for around 50% of the country's oil output. Among NOC's subsidiaries, the largest oil producer is the Waha Oil Company (WOC), followed by the Agoco, Zueitina Oil Company (ZOC), and Sirte Oil Company (SOC). Oil resources, which account for approximately 95% of export earnings, 75% of government receipts, and over 50% of GDP. Oil revenues constitute the principal foreign exchange source. Much of the country's income has been lost to waste, corruption, conventional armaments purchases, and attempts to develop WMD, as well as large donations to developing countries in attempts to increase Qadhafi's influence in Africa and elsewhere. Despite the country's relatively high per capita GDP, government mismanagement has led to high inflation and increased import prices, resulting in declining living standards. Reflecting the heritage of the command economy, three quarters of employment is in the public sector, and private investment remains small at around 2% of GDP.

Falling world oil prices in the early 1980s and economic sanctions caused a serious decline in economic activity, eventually leading to a slow private sector rehabilitation. At 2.6% per year on average, real GDP growth was modest and volatile during the 1990s. Libya's GDP grew in 2001 due to high oil prices, the end of a long cyclical drought, and increased foreign direct investment following the suspension of UN sanctions in 1999. Real GDP growth has been boosted by high oil revenues, reaching 4.6% in 2004 and 3.5% in 2005. Despite efforts to diversify the economy and encourage private sector participation, extensive controls of prices, credit, trade, and foreign exchange constrain growth.

Although UN sanctions were suspended in 1999, foreign investment in the Libyan gas and oil sectors were severely curtailed due to the U.S. Iran and Libya Sanctions Act (ILSA), which caps the amount foreign companies can invest in Libya yearly at $20 million (lowered from $40 million in 2001). As of May 2006, the U.S. has removed Libya from its list of states that sponsor terrorism and has normalised ties and removed sanctions. This clears the road for U.S. oil companies to exploit Libyan oil and is expected to have a positive impact on the Libyan economy. The NOC hopes to raise oil production from 1.80 million bpd in 2006 to 2 million bpd by 2008. FDI into the oil sector is likely, which is attractive due to its low cost of oil recovery, high oil quality, and proximity to European markets. Most Libyan oil is sold on a term basis, including to the country's Oilinvest marketing network in Europe; to companies like Agip, OMV, Repsol YPF, Tupras, CEPSA, and Total; and small volumes to Asian and South African companies.

Statistic	Amount
Proven Oil Reserves (2007E)	41.5 b/bbl
Oil Production (2006E)	1.8 mmbd (95% crude)
Oil Consumption (2006E)
Net Oil Exports (2006E)	1,525 Mbpd
Crude Oil Distillation Capacity (2006E)	378 mbpd
Proven Natural Gas Reserves (2007E)	52.7 tcf
Natural Gas Production (2006E)
Natural Gas consumption (2005E)

Notes:
1. Energy Information Administration (2007)

Field Development and Exploration

In November 2005, Repsol YPF discovered a significant oil deposit of light, sweet crude in the Murzuq Basin. Industry experts believe the discovery to be one of the biggest made in Libya for several years. Repsol YPF is joined by a consortium of partners including OMV, Total and Norsk Hydro. Also located in Murzuq Basin is Eni’s Elephant field. In October 1997, a consortium led by British company Lasmo, along with Eni and a group of five South Korean companies, announced that it had discovered large recoverable crude reserves south of Tripoli. Lasmo estimated field production would cost around $1 per barrel. Elephant began production in February 2004.

WOC's Waha fields currently produce around . In 2005, ConocoPhillips and co-venturers reached an agreement with NOC to return to its operations in Libya and extend the Waha concession 25 years. ConocoPhillips operates the Waha fields with a 16.33% share in the project. NOC has the largest share of the Waha concession, and additional partners include Marathon and Amerada Hess.

Refining and Downstream

Libya has five domestic refineries:

Refinery	Capacity	Operator
Zawia Refinery	120,000	ZOC
Ras Lanuf Refinery	220,000	Rasco
El-Brega Refinery	10,000	SOC
Tobruk Refinery	20,000	Agoco
Sarir Refinery	10,000	Agoco

Notes:
1. Amounts in barrels per day.

Diversification

In 2007, mining and hydrocarbon industries accounted for well over 95 per cent of the Libyan economy. Diversification of the economy into manufacturing industries remain a long-term issue.

Although agriculture is the second-largest sector in the economy, Libya depends on imports in most foods. Climatic conditions and poor soils severely limit farm output, and domestic food production meets only about 25% of demand. Domestic conditions limit output, while higher incomes and a growing population have caused food consumption to rise. Because of low rainfall levels in Libya, agricultural projects such as the Al Khufrah Oasis rely on underground water sources. Libya's primary agricultural water source remains the Great Manmade River (GMMR), but significant resources are being invested in desalinization research to meet growing demand. Libyan agricultural projects and policies are overseen by a General Inspector; there is no Ministry of Agriculture, per se.

Labor Market

Libya posted a 3.3% rate of population growth during 1960-2003. In 2003, 86% of the population was urban, compared to 45% in 1970. Although no reliable estimates are available, unemployment is reportedly acute. Over 50% of the population under the age of 20. Moreover, despite the bias of labor market regulations favoring Libyan workers, the mismatch of the educational system with market demand has produced a large pool of expatriate workers, with typically better-suited education and higher productivity. However, because of shortages for manual labor, Libya has also attracted important numbers of less skilled immigrants. Expatriate workers represent an estimated fifth of the labor force. Although significant, the proportion of expatriate workers is still bellow oil producing countries in the Persian Gulf. Foreign workers mainly come from the Maghreb, Egypt, Turkey, India, the Philippines, Thailand, Vietnam, Poland, Chad, Sudan, and Bosnia and Herzegovina . They tend to earn relatively high wages, taking either skilled or hard manual jobs. Census data for 2000 show the share of expatriates earning over LD 300 (US$230),???? per month was 20%, compared to 12% for Libyan nationals. A campaign encouraging conversion of qualified civil servants to entrepreneurs, in the face of public sector over employment and declining productivity, does not seem to be producing the desired results thus far.

External trade and finance

The Government is in the process of preparing a financial sector reform program. Recent legislation setting corporate governance standards for financial institutions makes progress towards better management and greater operational independence of public banks. However, Libyan public banks still lack management structures supported by skills in critical areas like credit, investment, risk management, and information and control systems. The new banking law reinforces the independence of the Central Bank of Libya (CBL) and offers a legal framework for regulating banking activities, even if some provisions call for improvement. Despite progress brought by the new banking Law that specifies and limits its duties and responsibilities, the CBL remains the owner of the public banks, with the associated potential conflict of interest between ownership and regulation.

Financial sector reform has also progressed with partial interest rate liberalization. Interest rates have been liberalized on deposits, while a lending rate ceiling has been set above the discount rate. The Libyan Stock Exchange, established in 2007, is the first exchange of its kind in the country.

Statistics

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Industrial production growth rate: NA%

Electricity - production: 14.4 billion kWh (2003)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 13.39 billion kWh (2003)

Electricity - exports: 0 kWh (2003)

Electricity - imports: 0 kWh (2003)

Agriculture - products: wheat, barley, olives, dates, citrus, vegetables, peanuts, soybeans, cattle, corn

International rankings

Organisation	Survey	Ranking
Heritage Foundation/The Wall Street Journal	2006 Index of Economic Freedom	152 out of 157
The Economist	The World in 2005 - Worldwide quality-of-life index, 2005	70 out of 111
Energy Information Administration	Greatest Oil Reserves by Country, 2006	9 out of 20
Reporters Without Borders	Press Freedom Index (2007)	155 out of 169
Transparency International	Corruption Perceptions Index 2007	131 out of 180
United Nations Development Programme	Human Development Index 2005	58 out of 177

Notes

References