Over 9 months of inactivity at Libya’s vital Eastern ports has had a devastating effect on the country’s economy, as Libya is forced to slash its national budget by over 30% due to lost revenue.
Perhaps more significantly, the country has also announced a spending freeze on national infrastructure, meaning that the country’s ageing oil fields will have to operate on a policy of ‘make do and mend’.
Protests at oilfields and ports since last July have knocked oil production down to 200,000 barrels per day (bpd) from 1.4 million bpd, hitting the sole source of budget revenue.
Parliament proposes to cut the budget to $36 billion from an initially planned $55.3 billion to focus on salary payments and ministry spending, Mohammed Abdullah, head of the budget committee, told Reuters late on Sunday.
He said funding for new infrastructure and other development projects would be halted for now. “It is very difficult … to launch a development plan in the absence of a new government,” Abdullah said.
Prime Minister Abdullah al-Thinni resigned a week ago after just a month in office, saying gunmen had tried to attack his family.
More than half of the budget goes to subsidies and salaries for a greatly overstaffed and inefficient public service, a legacy of Gaddafi who put most adults on the payroll to discourage opposition.
The government reached a deal earlier this month with rebels in the east to end their blockade of four oil ports but so far only the Hariga terminal has reopened.
The reopening of the Zueitina port, planned two weeks ago, has been delayed due to damage during the long blockade, justice minister Salah al-Merghani said on Sunday.
Talks with the rebels to restart exports from the eastern Ras Lanuf and Es Sider ports will start only after the Zueitina terminal has been reopened, he said.
A different set of protesters has halted most oil production in the west of the vast desert country. Talks to reopen major western oilfields have gone nowhere.
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