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Reference Date: 18-August-2014

FOOD SECURITY SNAPSHOT

  1. Wheat import needs estimated around average levels

  2. Recovery from the civil war observed although recent escalation of conflict is a concern

  3. Food and fuel subsidy reform is being considered by the Government

Above-average domestic crop production in 2014

The 2014 grain harvest in Libya was concluded in June. Normal meteorological conditions were reported to have favoured good crop establishment and development of the 2014 winter wheat and barley crops, resulting in a harvest of about 200 000 tonnes, similar to last year.

The Libyan Government aims at gradually increasing cereal production by four fold to 800 000 tonnes by 2020 from their current levels of about 200 000 to 220 000 tonnes. Generally, however, natural and environmental conditions limit Libya’s agricultural production potential.

Libya relies heavily on imports (up to 90 percent) for its cereal consumption requirements. The actual import requirement appears to remain around the average of the last five years of about 2.5 million tonnes, mostly wheat. Industry reports indicate that grain imports to Libya have become less centralized following the 2011 conflict with about 35 private companies importing grain for the Government.

Recovery from the 2011 conflict but recent escalation of conflict a set-back to the economy

Libya is one of the most hydrocarbon dependent economies in the world, with oil revenue accounting for more than 80 percent of state revenues. Libyan oil production has recovered faster than expected following the conflict in 2011, although some problems persist from protests, attacks and electricity shortages. Challenges also remain in the areas of infrastructure and economic diversification.

After a contraction in GDP in 2011 by almost 60 percent caused by the fall in oil production, the economy grew by over 92 percent in 2012 (year-on-year). Continuous political transition and volatile oil production are expected to result in a contraction of about 4 percent in 2014.

Inflation decreased from almost 16 percent in 2011 to about 3 percent in 2014 due to high subsidies, currency stability and suboptimal growth. The unemployment rate – estimated at 26 percent as of end 2010 – is likely to remain unchanged in the short run.

Recent flare up of the conflict caused by fighting among various militia groups left several hundreds dead, including civilians. Increasing violence led to departures of foreigners and disrupted food, water and fuel supply to civilians.

Food and fuel subsidy reform being considered

The Government is considering launching food and fuel subsidy reform and replacing it with a direct monthly cash transfer to Libyans. It is estimated that around one-third of subsidized food and fuel are smuggled into neighbouring countries. In 2012 the fiscal cost of food subsidies is about USD 2.4 billion, representing 2.8 percent of the GDP (about USD 400 per capita). Spending on fuel, food and electricity subsidies is twice the current spending levels on education and health combined. Among the subsidized food commodities are flour, rice, semolina and pasta.







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