Country Report Libya October 2009

Outlook for 2010-11

• Political power will remain vested in the Libyan leader, Colonel Muammar Qadhafi. Libya will retain its unique jamahiriya (republic of the people) system, but the structures of government will undergo halting reform.
• Colonel Qadhafi's most likely successor is his son, Saif al-Islam Qadhafi, a reformer who was appointed as general co-ordinator of the Popular Social Command with powers over parliament and the executive in October 2009.
• Relations with the US and EU will be subject to periodic bouts of tension, despite the resolution of the Lockerbie affair and scrapping of Libya's weapons of mass destruction programme.
• The hydrocarbons sector will dominate the economy, but non-oil growth will be strong. However, the government's inconsistent and unwelcoming policies risk deterring international oil companies and other investors.
• We expect real GDP growth to rise to 5.1% in 2010, owing to raised OPEC output quotas and government investment, before falling to 4.2% in 2011 as the recovery slows in Western economies causing oil production cuts.
• We expect inflation to rise to an average of 5.5% over the forecast period, as international oil and non-oil commodity prices, particularly for food, rise.
• The current account will record a surplus of 31% of GDP in 2010—compared with an estimated 22% in 2009—although this will fall to 23% in 2011 as a result of lower average annual oil prices.

Monthly review

• Saif al-Islam Qadhafi has been appointed as the general co-ordinator of the Popular Social Command, placing him at the head of the country's political structure.
• The imprisoned members of the Libyan Islamic Fighting Group have continued their efforts to reach reconciliation with the state, issuing a public apology in September.
• Colonel Qadhafi has addressed the UN General Assembly with a speech full of political theatre. He tore up the UN charter and demanded US$7.77trn of compensation for damages to Africa during the colonial period.
• The governor of the Central Bank of Libya, Farhat Omar Bengdara, has confirmed that further privatisation of the banking sector will be carried out with a sale of a 15% of the National Commercial Bank before the end of 2009.
• The NOC has unveiled a major oilfield development programme.
• The IMF has released a notice that states that the overall macroeconomy is strong but also draws attention to poor public financial management.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;79;39
NAICS Code: 72;71;31