Libyan economy on verge of collapse

Libya’s economy is on the verge of collapse, the World Bank has warned.

“The Libyan economy is near collapse as political stalemate and civil conflict prevent it from fully exploiting its sole natural resource: oil,” the World Bank warned in a report published today.

Fighting between the two rival governments and militia tribal wars along with the insurgence of Daesh fighters have added pressured on to the country’s economy leading it to near collapse.

Libyans have been faced with rising inflation and a sharp drop in wages.

“Substantial loss in real purchasing power of the population” with basic food items seeing a 31 per cent price increase, the World Bank reported.

According to Karima Munir, an independent Libyan expert, the crisis is likely to continue as revenues struggle to keep up with public spending even as exports resume.

“The country is a massive welfare state and alternative sources of income need to be found,” she said. “The reliance on oil has had a severe impact on the economy and put pressure on [capital] reserves.”