June 19, 2006 12:00 PM - 2:00 PM
Speakers: Reema Ali, Managing Partner of Ali & Partners
Michele Dunne, Editor of Arab Reform Bulletin, Carnegie Endowment
Mohamad Elhage, Deputy Division Chief, Middle East and Central Asia, IMF
Aristomene Varoudakis, Lead economist, ECA Region, World Bank
Libya has recently announced and implemented reforms to encourage development in the country. However, with oil prices above $70/barrel, many worry that Libya does not sense the urgent need for economic reform. Libya’s economy is dependent on oil production, and if oil prices dropped dramatically, Libya’s economy would crash. The speakers at this event briefly addressed what Libya is doing to reform its economy, while focusing mainly on the problems Libyan reforms face now and in the future.
Libya’s potential for economic growth is enormous if oil revenues are used to diversify the economy and stimulate long-term growth. Libya appears to recognize this potential, because it has granted the IMF complete access to its financial documents since 2002. Countries rarely grant the IMF this level of access. The IMF reports on Libya’s economy and progress every year, suggesting that Libya is working with the international community to develop its economy.
However, Libya faces many challenges in the development process. First and foremost, Libya’s governance structure is unwieldy, ineffective, and lacks the transparency and effectiveness necessary for FDI. Libya is a “participatory democracy”. Every year, each citizen is expected to attend large town-hall meetings to debate political issues. The results of this meeting are filtered up to regional and then national meetings, where decisions can be made. In reality, participation is extremely low, coalition-building, based on issues or common interests, is impossible, and the system is manipulated from the top. As a result, Libya lacks transparency and credibility, and development prospects are limited. Furthermore, the speakers questioned the integrity of Libya’s participatory democracy, suggesting that many decisions are made outside the government structure entirely.
by Adam Perry