Libya weighs salary tax and fuel subsidy cuts in economic reform push

Libya Observer

10-05-2025

The Central Bank of Libya (CBL) has expanded talks with the House of Representatives' finance committee, with participation from the Government of National Unity and the rival eastern authority, as part of efforts to activate a stalled economic reform agenda, sources at the CBL told Al-Araby Al-Jadeed.
The draft plan under discussion includes imposing a new tax on high public-sector salaries, partially or fully lifting fuel subsidies, and implementing sweeping austerity measures. These would include downsizing Libya's diplomatic missions abroad and suspending ongoing development projects to curb public spending.
Economist Ezzedine Ashour described the reform package as largely superficial, warning it avoids core structural issues such as entrenched corruption, weak governance, and heavy dependence on oil revenues.
Ashour cited the Central Bank's 2021 attempt to devalue the Libyan dinar, which was meant to stabilize public finances but faltered amid institutional instability and rising government expenditure.
'It didn't ease the liquidity crisis or improve purchasing power,' he said, noting that the move instead triggered higher import prices and fueled inflation. Tags: CBL