Libya Economy and
Dr Yousef Elshrek
• The Country Risk Tier (CRT) reflects A.M. Best’s assessment
of three categories of risk: Economic, Political and Financial
• 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
• 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.
• 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.
• 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
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
Source: A.M. Best
• Financial System Risk: Very
• The Libyan insurance industry is
supervised by the Insurance Supervision
and Controlling Authority (ISCA) of the
Public Committee for Economy Trade
• Libya’s financial system remains heavily
under state influence and foreign
investment is subject to numerous
• 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