Summary:

On 9 April 2025, the United Nations Support Mission in Libya (UNSMIL) issued a statement to call Libyan actors to implement a unified budget amid rising living costs and the growing foreign exchange deficit. 

The statement pointed to erosion of public trust in state institutions as they struggle to resolve financial issues, while cross-country accusations fly. The statement comes as the Central Bank of Libya (CBL) decided to lower the currency’s value citing dual government overspending as a cause for currency decline. This also follows a decline in oil revenues which led to an inability to cover the dual spending.  

Abdelhamid Debaibah responded to CBL’s statements about overspending by accusing the east-based government and the House of Representatives of spending without oversight from the CBL. The same accusations were leveled against Debaibah’s western government by the High Council of State, Mohamed Takala.  

Outlook: 

Calls to end overspending from previous CBL directors and the new leadership have long led to mutual accusations between the two governments in Libya which reflects the intransigence of both sides. 

In the absence of such political will, the decisions of the CBL and its leverage will remain limited and conjectural while the Libyan financial situation will require structural adjustments. 

Current inflation and waning purchasing power is likely to lead to social frustration and protests while also empowering militias to defy state institutions and engage the parallel economy. 

While Libyan actors are hoping for energy projects to increase revenues, financial instability and resulting political repercussions could hinder the advancement of foreign investments in the sector. Also, revenues from oil remain vulnerable to fluctuations in international prices thus making urgent the rationalization of a joint budget. 

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