The African Development Bank has released a report on Libya’s economic situation in 2025. The report includes a comprehensive analysis of macroeconomic trends. It also provides detailed recommendations for recovery. The title of the report is “Improving Libya’s capital to contribute to Libya’s development”.
The report confirms that Libya’s economy is poised to recover after a period of contraction. Growth is projected to be 12.4% in 2025 and 4% in 2026. This growth will be primarily supported by improvements in oil production. Despite ongoing challenges, Libya has great potential for development. This is based on recovery needs, abundant natural resources and diversification opportunities.
The report estimates that Libya’s economic transformation will require approximately $6.9 billion in annual investment by 2063. Additionally, emergency development funding of $39.3 billion per year is required by 2030. These investments need to be directed towards infrastructure, renewable energy and agriculture.
Economic development remains constrained by a high dependence on oil revenues. Other constraints include limited taxation and weak investment in strategic sectors. The report noted that the financial system is still in a deteriorating state. This limits the flow of capital needed to support growth and diversification.
The report quoted Malin Bromberg, the African Development Bank’s country manager for Libya, as saying. He said the bank is committed to supporting Libya’s development agenda. This is despite the underutilization of key resources such as strategic location and human capital. Blomberg said that with the right tools and partnerships, this potential can be turned into tangible progress. The Bank is committed to supporting recovery, economic diversification and institutional strengthening.
This report presented an integrated package of policy options. In the short term, they called for improved resource management and greater transparency. In the medium term, the focus was on economic diversification and promoting private sector participation. In the long term, it recommended expanding financial resources, modernizing tax policy, and strengthening institutional frameworks.
The report emphasized the need to reduce dependence on oil revenues. He emphasized expanding the tax base and improving collection mechanisms. The report noted that Libya has great potential to mobilize domestic resources. However, extensive tax exemptions, a large informal sector, and data gaps hinder efficient revenue generation. Political uncertainty also remains a major obstacle.
Libya’s financial sector suffers from poor access to formal financing. There are also limited financial products, especially for small and medium-sized enterprises. Without a unified budget, planning becomes difficult. The report called on central banks to strengthen their oversight of parallel exchange markets. Inflation also needs to be managed through targeted policies. Inflation is expected to rise to 2.5% in 2025 and 2.7% in 2026 following the devaluation of the dinar.
The report noted that Libya has no external debt. Domestic debt is projected to decline from 91.5% of GDP in 2023 to 76% by 2028. At the same time, it warned of the risks posed by the lack of a national climate change adaptation plan. These risks include floods, drought, and desertification.
The report emphasized that accelerating economic development requires prioritizing political stability. Comprehensive national reconciliation is also essential. It called for a step-by-step roadmap focused on short-term emergency stabilization measures. In the medium term, the focus should be on institution building and diversification. In the long term, we should aim for sustainable and inclusive development.
The report called for encouraging remittances and bond issuance for expatriates. It recommended the creation of regional value chains in agriculture, manufacturing and renewable energy. He also proposed the establishment of an economic zone and support for entrepreneurship. The report noted that Libya has large amounts of untapped mineral resources, including approximately 5 billion tons of iron ore. The country also has great potential in solar and wind energy.
The report identified major obstacles to development. These include the weak ability of the private sector to create jobs and skills gaps due to disruptions in education. It called for the development of schools, the construction of new facilities, and the hiring of qualified teachers. The curriculum must be adapted to the needs of the labor market.
Approximately 30% of the currency remains outside the banking system. The report also pointed to weak private equity investment and stagnation in the insurance market. He emphasized the need for comprehensive institutional reform. These include improving governance, increasing transparency and modernizing financial laws.
The report concludes by highlighting the need for a stable and transparent business environment. Maximizing economic returns from natural capital through sustainable practices is essential. This supports private sector-led growth and helps build a green and sustainable economy.
