Libyan financial expert and university professor, Rajab Abdelilah Ben Imran, has warned that the recently introduced unified salary scale for government employees may lead to inflation and depletion of the country's reserves if not based on a realistic oil price. He emphasized the need for a thorough study of Libya's income to ensure the government's ability to pay public sector salaries and other expenses.
The unified salary scale, which includes a 10% increase, was approved by the temporary Government of National Unity to promote social justice. However, Ben Imran cautioned that the current economic situation in Libya is critical and requires a long-term strategy, a unified executive authority, and stable governance to make informed economic decisions.
According to Ben Imran, the increase in salaries will directly impact the state's budget, with salaries accounting for over 73% of government expenditure, reaching over 73 billion dinars. He warned that if oil prices drop or oil fields and ports are closed, the state may struggle to cover its expenses, potentially leading to reduced government spending, borrowing, or using foreign currency reserves.
The Central Bank of Libya reported that the country's expenditures reached 88.6 billion dinars in nine months, with 60.6 billion dinars allocated for salaries. Ben Imran stressed that the situation in Libya is fragile, and the future may be more precarious due to ongoing divisions, lack of a unified government, and widespread corruption.
The introduction of the unified salary scale aims to promote social justice and equality among public sector employees. However, experts argue that the plan's success depends on various factors, including the country's economic stability and the government's ability to manage its finances effectively.
Libya's economic challenges are compounded by its reliance on oil exports and the ongoing impact of conflict and instability on the country's infrastructure and economy. The government faces significant hurdles in managing the country's finances, providing public services, and promoting economic growth.
Ben Imran's warnings highlight the need for a comprehensive and sustainable approach to Libya's economic development, including measures to promote economic diversification, improve governance, and enhance transparency and accountability in the management of public finances.
Key points
- The unified salary scale may lead to inflation and depletion of Libya's reserves if not based on a realistic oil price.
- The Libyan government's ability to pay public sector salaries and other expenses is a major concern.
- The country's economic stability and future prospects depend on a comprehensive and sustainable approach to economic development.
