Announcing the move in early November, Ghanem said the subsidy reductions would be offset by tax and interest rate cuts and a doubling of the national minimum wage. He also promised legislative changes to open up the housing and home loan markets as part of a programme to build 120,000 new homes to deal with the country’s growing housing shortage.
Ghanem said he would abolish $2,000 million of subsidies on gasoline, which currently costs about LD 0.11 ($0.085) a litre, following ‘a revaluation of salaries, which will allow Libyan citizens to earn as much as citizens of other oil-producing countries’. Under the plan, the national minimum wage will double, from LD 150 ($116) a month to LD 300 ($232) a month. The increase will also apply to employees of foreign companies in the country.
Ghanem said the reform programme also included plans for new laws that would see the country’s two million foreign workers gradually replaced by local employees. ‘Under these laws, foreign firms will be obliged to employ more Libyans than foreigners and to re-evaluate salaries for all employees,’ he said. Unemployment in the country currently stands at about 270,000.
The reforms are also aimed at tackling ‘corruption at the heart of the administration’ that he said was the result of the subsidies. Tripoli is struggling with a growing black market in subsidised oil, food and other products.
However, some questioned the PM’s ability to deliver the changes. Since his appointment in 2003, Ghanem has made mixed progress on his task of delivering economic reform.
‘There is no doubt that he will face strong opposition,’ says Oliver Miles, vice-chairman of the Libyan British Business Council and chairman of the UK’s Middle East Consultants (MEC)
. ‘But he is the prime minister and has the support of Saif al-Islam [Libyan leader Muammar Gaddafi’s son] and therefore Colonel Gaddafi. So it is likely that he will get some of his way. But when it comes to removing subsidies on foodstuffs, I think even the leader would have his work cut out.’