Petroleum makes Libya one of Africa's richest countries but corruption and bureaucracy have left even the country's leader Moamer Gathafi scratching his head about what happens to all the money.
OPEC member Libya has estimated reserves of 42 billion barrels -- the third largest in Africa -- and pumps an estimated 1.8 million barrels per day. Revenues from that, which account for 75 percent of the state budget and 95 percent of exports, have led to a surge in construction and consumer spending but efforts to modernise the economy have made slow progress. The development of major sectors like health, education and infrastructure remains far from satisfactory, and many Libyans have failed to benefit at all despite the government's avowedly socialist policies.
"Where does the oil money go?" Gathafi asked recently, pledging to lead "a revolution against corruption" by closing ministries and distributing the money directly to the people, though he has yet to act on his decision. His son Seif al-Islam has lambasted "a civil servants' mafia," which he accuses of opposing reforms. Some of the assets are held directly by the powerful Libyan Investment Authority. It manages several funds with holdings everywhere in the world but especially in Africa.
Libya's 2008-2012 strategic plan allocated a total of 75 billion dollars over five years to major infrastructure projects, equal to 60 percent of the normal state budget for five years. But projected spending was slashed following last year's fall in oil prices. Meanwhile, the increase in the number of big projects has led to a labour shortage and a bottleneck in the supply of construction materials.
The jump in oil revenues in the past few years spurred an explosion in prices, chiefly for real estate and food in a country which has to import around 90 percent of its equipment and nutrition. Inflation soared from negative figures at the end of the 1990s to a record 12.9 percent in July last year, before plunging to one percent in June this year, according to the Central Bank of Libya. The surge prompted government newspaper Al-Shams to call for the "nationalisation of trade." |