Libya Country Risk Rating

Libya, a nation which is known to control the largest proven oil reserves in Africa as well as its fragile and divided state, has not seen any alteration in its overall country risk rating of very high. A political impasse remains between the UN-recognized Government of National Unity (GNU), who are based in the capital Tripoli, and led by Prime Minister Abdul Hamid Dbeibah, and the Government of National Stability (GNS), which is based in eastern Libya and led by Prime Minister Osama Hamad, with the backing of the House of Representatives (HoR) and the Libyan National Army (LNA) under the command of General Khalifa Haftar. The East-West division, resulting from the 2014-2020 civil war, has been met with a proposal of a unified interim government which would allow for the country to organize and hold national elections. Although a proposal which is fully supported by the GNS, the GNU continue to prolong the national stalemate by opposing the idea. Political interference and political violence both remain very high. In terms of the GNU, strong relations have been maintained with Turkey, Qatar and China, as evidenced by the discovery of Turkish and Chinese combat drones in eastern territory, reinforcing General Haftar’s hold over the east and major oilfields in the south. Continued violations of the long-standing U.N. embargo on supplying weapons to the North African nation indicate that a resolution between divisions in the east and west looks unlikely. Legal & regulatory risk continues to be assessed as very high. High oil prices and the Iran war has enabled Libya to increase its daily oil production to 1.43 mln barrels. Therefore, the IMF estimate GDP growth to remain stable at 6.7% in 2026 and 4.5% in 2027. However, oil and gas accounts for approximately 95% of Libya’s exports and government revenue, with limited diversification, and the tense relationship between the East-West has meant that the risk of doing business remains very high. In recent developments, the two rival legislative bodies of Libya have confirmed an agreement regarding its first LYD 190 bln (USD 30 bln) unified state budget in over a decade. A budget agreement that strengthens Libya’s financial stability shows there is a solution to the years of financial division, even as sovereign non-payment risk continues to be assessed as medium-high. Exchange transfer risk, however, remains very high following the Libyan Central Bank reporting a 14.7% devaluation of the Libyan dinar. Setting the exchange rate at 6.3 – 6.4 to the USD, while in the parallel market the Libyan dinar is experiencing high volatility at approximately 8.3 – 8.8 to the USD.