‘Directors were encouraged by the recent declarations of the Libyan leadership stressing the need to reform the public sector and accelerate the pace of privatisation,’ says the IMF executive board assessment. However, the report goes on to call for wide-ranging structural reform.

The government is called on in the near term to improve macroeconomic management, dismantle trade barriers and eliminate price subsidies. Longer-term recommendations include: the restructuring of state-owned companies; legal, tax and regulatory reform; and greater alignment of the education system with the job market.

However, alongside the inevitable call for liberalisation, the report’s outlook for 2003 and beyond is positive. Real non-oil gross domestic product (GDP) growth of 2.5 per cent and large external fiscal and current account surpluses are predicted for 2003. ‘Directors emphasised that the generally favourable medium-term macroeconomic outlook does not diminish the need to implement key structural reforms if higher sustainable growth is to be achieved,’ says the report.

In June, Shukri Ghanem was appointed prime minister with a mandate to accelerate economic reform. Libyan leader Muammar Gaddafi has recently declared his commitment to wholesale privatisation of state-owned firms (MEED 20:6:02).