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Libya economy and political
Libya economy and political
Libya economy and political
Libya economy and political
Libya economy and political
Libya economy and political
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Libya economy and political

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  • 1. Libya Economy and Political Risk Tier Dr Yousef Elshrek
  • 2. • The Country Risk Tier (CRT) reflects A.M. Best’s assessment of three categories of risk: Economic, Political and Financial System Risk. • Libya is a CRT-5 country and has very high levels of political, economic and financial system risk • Libya’s economy remains heavily dependent on oil. • The Libyan hydrocarbon industry accounts for more than 95% of merchandise exports, 80% of government revenues and more than half of gross domestic product. • Political upheaval and civil war in Libya began in February 2011. • The removal of Muammar al-Qadhafi in August of 2011 was followed by the newly elected General National Congress which is attempting to establish a new system of governance, a revised constitution and provide leadership and direction.
  • 3. • Economic Risk: Very High • Libya experienced an extremely sharp contraction of 62% in economic activity in 2011 as the political revolution and civil war disrupted all forms of business activity, including oil production. • The economy has recovered strongly with 104.4% growth in 2012, driven by oil production coming back on line. • Libya’s economy remains heavily dependent on oil.
  • 4. • Political Risk: Very High • Security remains a key concern in Libya, with limited control over lingering tribal rivalries who are now heavily armed as a result of the recent revolution. • High unemployment, shortage of housing and mismanagement of oil revenues are paramount problems for the current government. • Periodic shutdowns of Libyan oil production, strikes and increased protests have increased instability in the country and created a large fiscal deficit, limiting the governments ability to provide much needed food, medicine, electricity and wages. • Formation of a working government will be difficult due to the nascent political groups. • The rebuilding of infrastructure needs to be a key priority for the newly formed government. Source: A.M. Best
  • 5. • Financial System Risk: Very High • The Libyan insurance industry is supervised by the Insurance Supervision and Controlling Authority (ISCA) of the Public Committee for Economy Trade and Investment. • Libya’s financial system remains heavily under state influence and foreign investment is subject to numerous restrictions. • Much of the foreign direct investment left the country in 2011 and has been slow to return as many investors wait for clarity on the political situation as well as
  • 6. • Source : AMB Country Risk Report 2013

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