Monday, 8 November 2010

Libya: Foreign companies advised to monitor levels of political payments

The vexed question of employment for Libyans taking priority over imported personnel goes on. The Ministry of Labour has announced that foreign oil companies alone have generated 4,900 jobs for Libyans in the last 12 months, most of them at graduate level. At the present time, it is claimed that a further 1,000 individuals are under training abroad. The government remains wedded to the prescription of Libyans first in line for employment, and migrants being tolerated only when they bring skills that are in short supply.

There is some variation across sectors in the application of the rules, with the oil business by far the most attractive to young graduates. The value of labour of this kind in the white-collar occupations to the foreign oil companies is not clear, though the transfer of experience to these new echelons is seen as an essential part of social responsibility of the multi-nationals and is contributing usefully to the development of employment.

The apparent profligacy of the government in utilising foreign exchange for non-economic ends is continuing, with awards for small development projects ranging from school construction in Mali to an aid project in Dafur catering for expenditure of US$8 million. For the immediate future, Libya appears to have access to abundant foreign exchange resources with which to fund these ad-hoc grants, which should not adversely affect the main spending programmes of the annual budget and the development of the economy.

It seems unlikely, however, that sums of this kind can be dispensed on so wide a scale in the future. The implication of this is for a gradual decline in the aid given by Libya, and in expenses of a political kind to support the Leader's international ambitions.

Foreign companies would be wise to keep a running tally of Libyan foreign exchange income and expenditure lest the current downturn in oil revenues becomes an obstacle to payments to overseas contractors.

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

© 2010 Menas Associates

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