Libya to post $10bn deficit in 2012

06 February 2012

Oil production generates $4bn in revenues in past four months

Libya’s government will post a budget deficit of $10bn this year as it struggles to pay public workers’ salaries and meet energy costs, according to the head of the country’s National Transitional Council (NTC).

Mustafa Abdel Jalil told French daily newspaper Le Figaro on 2 February that the country had still only recovered a fraction of the $100bn in assets frozen overseas during the country’s bitter civil war.

“The production of oil has brought in $4bn in the past five months, while the salaries of civil servants are $22bn a year and spending on electricity and fuel $14bn,” Abdel Jalil said. “The budget being prepared should be in deficit of $10bn.”

Restoring oil and gas production in the Opec member state is the first part of rebuilding the country and reviving the economy after an eight-month civil war, the IMF said on 6 February, warning the government’s finances remained “precarious”.

The country’s central bank governor, Saddeq Omar Elkaber, said on January 19 that the government 2012′s budget would register a LD7bn ($5.73bn) deficit and that the lifting of UN sanctions on the central bank’s assets had unfrozen 95 per cent of its $100bn in assets.

“Only $6bn has been repatriated,” Abdel Jalil said. “We’re still working to recover the rest.”

Abdel Jalil said that local councils were putting together organisational structures and once they were in place money would be injected to pay civil servants. He said that process should be completed by February 17.

The NTC, the body which won Nato backing to oust Muammar Gaddafi last year, is now struggling to restore services and impose order on myriad armed groups.

Militias have carved up the capital Tripoli and the rest of the country into competing fiefdoms, each holding out for the share of power they say they are owed.

Abdel Jalil said that it would be easier to amalgamate militias into the police and national army once more revenues entered the state coffers.

“Within two months, we think we will have incorporated 60-70 per cent of the revolutionaries,” he said.

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