Libya's economic situation is deteriorating due to multiple paths of public wealth depletion, according to economist Idris Al-Sharif. He warns that a significant portion of state resources is being wasted before reaching the general treasury. This depletion occurs through three main channels: revenue collection, foreign currency usage, and local spending. Al-Sharif emphasizes that addressing these imbalances can provide additional state resources and reduce the need to burden citizens with new expenses.
Al-Sharif identifies the first channel as the leakage of a large part of revenues from the source before reaching the Central Bank of Libya. Sectors such as oil, communications, and investments require greater control over revenue streams. The second channel involves the misuse of foreign currency that reaches the central bank through what he describes as "phantom allocations." The third channel concerns public spending, where a significant portion of dinars is leaked due to uncontrolled spending and lack of strict adherence to the budget.
Al-Sharif stresses that the problem is not limited to one stage but extends through the entire process from resource extraction and revenue collection to foreign currency usage and public spending. He suggests that closing the loopholes of waste and leakage can be a source of financing public needs. Al-Sharif links the control of public finances to the restructuring of the salary system, believing that a fair and studied salary scale, along with reducing waste, can provide resources to improve the income of underpaid sectors, such as education and health.
The economist criticizes recent salary decisions, warning that increases without comprehensive studies have created unjustified and unfair differences between state employees. He argues that responding to demands for increases will be financially challenging, and reversing previous decisions will be even more difficult. Al-Sharif presents the Libyan government and parliament with a financial dilemma: either meet salary demands, which could exceed budget capabilities, or devalue the dinar to finance increases and ease budget pressure.
Al-Sharif warns that devaluing the dinar will not eliminate the effects of previous salary increase decisions but will transfer some of the costs to citizens through reduced purchasing power. He emphasizes that improving employee incomes is desirable, but the core problem lies in managing the salary file through separate decisions that do not consider the overall economic picture. This includes considering the wage structure, fairness in distributing salaries, public spending, revenue size, inflation levels, and exchange rates.
The economist cautions that financial decisions do not end with the departure of those who made them, as they can turn into ongoing obligations that transfer between governments and burden future generations of officials and citizens. Al-Sharif warns that repeating financial mistakes could make citizens bear the final cost, either through reduced real income, savings, and purchasing power or by affecting the state's ability to provide basic services like health and education.
Al-Sharif concludes that addressing the salary file requires a comprehensive vision that links revenues, spending, exchange rates, inflation, and wage fairness. He warns that decisions made without considering future effects do not disappear with the departure of those who made them but remain as financial obligations that transfer from one government to another. This situation puts the Libyan citizen in a difficult position, facing the consequences of accumulated financial and economic decisions.
Key points
- Libya's public finance issues are worsening due to uncontrolled spending and revenue leaks.
- Economist Idris Al-Sharif warns that current salary decisions could threaten the stability of the Libyan dinar.
- Al-Sharif calls for a comprehensive vision to address the salary file, linking revenues, spending, and economic indicators.
