Preliminary Conclusions of the IMF Mission
Following the revolution, Libya has made major strides toward establishing a democratic system of governance. Elections were held on July 7, 2012 for the General National Congress (GNC), which international observers regarded as competitive and fair. The new interim government, installed on October 31, 2012, has a mandate to manage the transition until the ratification of a new constitution and a new round of parliamentary elections. While the Libyan economy is recovering rapidly from the conflict-induced collapse in economic activity, the high degree of dependency on volatile hydrocarbon earnings makes economic performance vulnerable to oil shocks and complicates macroeconomic management. The short-term challenges are to manage the political transition, normalize the security situation, address severe institutional capacity constraints and institute the timely compilation and dissemination of key statistics, and exercise budget discipline while maintaining macroeconomic stability. Over the medium term, the authorities should address issues including institutional capacity building, improving the quality of education, rebuilding infrastructure, putting in place an efficient social safety net, financial market development, and reducing hydrocarbon dependency through private sector-led growth.