Thursday, 24 June 2010

Libya: foreign capital more necessary than ever

The probability that Libya may have disbursed the entire budget of the development programme in a single year, and that it, therefore, requires supporting finance from overseas for the rest of the plan’s period, will mean that foreign capital and expertise will be more necessary than ever if significant changes are to be achieved.

Libyan social security is patchy and under-funded. Saif al-Islam is proposing the introduction of a bank and investment account for every member of the population. By this means, he hopes to create a private sector tranche of assets which would provide families with a minimum holding and enable them to take advantage of rising values on the stock exchange.

As worthy as this is, it appears to foreshadow an enforced savings programme which will presumably impact on all businesses with Libyan employees. It will also add to the burdens already laden on this area from the demands that Libyan labour be employed as first choice.

The increased competition for the most profitable investments in Libya will take place in the immediate future as a result of the heavy drain on Libyan financial resources, and this will probably lead to a greater dependence on incoming investment by foreign companies.

For more news and expert analysis about Libya please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

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