Monday, 23 June 2014

Libya's 2014 Budget is finally passed

Libya's 2014 Budget is finally passed

On 22 June the long awaited 2014 Budget originally submitted to the Congress in January by the then Prime Minister, Ali Zidan, was passed. This came as a surprise to some Congress members who had expected to debate the issue in a session on the 22 June. Having waited almost all day for there to be enough members present to reach 94 - the required number of members present to be able to hold an official consultative session - the Congress was told that the budget had been passed on a technicality.

As Libya Politics & Security – 16.06.14 explained, the Al-Thanni government declared last week that the Congress had 120 days from the budget’s initial submission to debate the law, after which time the government had the right to issue a financial mandate to ratify it. Al-Thanni therefore scored a bit of a coup by getting the law passed in this way, despite the fact that certain Congress members were keen for the budget to be reduced. 

The Central Bank may, however, still object to the budget being passed in this fashion, although it is not clear whether it has a legal right to do so. The budget stands at LD56.5 billion (US$45 billion). Given the crisis in revenues caused by the disruptions at the oil ports, a significant portion of this money is expected to come from a reserve fund at the Central Bank that was set up by Colonel Qadhafi as a fund for future generations. Whether the Central Bank will agree to this fund being used also remains open to question. 

It is clear, however, that Libya cannot fund itself from oil revenues alone. The budget committee in the Congress based the 2014 budget on a projected annual oil production of 600,000 b/d but the country has clearly fallen woefully short of this. Thus drawing on this LD16 billion fund, plus some of the central bank’s foreign reserves, therefore seems to be the only solution.

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

© 2014 Menas Associates

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