Why the adoption of a unified budget does not bode well for Libya's political process

On July 10, the House of Representatives (HoR) unanimously approved a unified budget, the first in a decade, with the backing of the Central Bank of Libya (CBL). Worth around $37 billion (180 billion LYD) with the official exchange rate, the budget has raised debates around deficits and inflationary pressures but its political impact is not to be overlooked.

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Since a major part of Libya’s political crisis revolves around competition over resources, foreign mediators and domestic stakeholders alike have considered the economic file as a way to find solutions toward peace and reconciliation.

The economic track was crucial in putting an end to the 2019-2020 conflict and the rise of the Government of National Unity (GNU) as an unified executive authority in 2021 raised hopes that Libya could operate under a single budget approved by the HoR after years of unofficial understandings between the CBL and Libyan authorities.

However, political disputes prevented such a unified budget from materialising and, since 2022, the country has become once more politically divided between the GNU and the eastern-based Government of National Stability (GNS) backed by the HoR Speaker Agila Saleh and the Libyan National Army (LNA).

At first operating with little funds, the GNS managed to gradually gain the approval of CBL Governor Sadiq al-Kabir, who has held the keys to Libya’s finances since 2011 and has a tense relationship with GNU Prime Minister Abdulhamid Dabaiba. This has meant that money has flowed unofficially from the CBL to both the GNU and GNS, with little transparency and accountability.

The HoR, which has only approved the GNS’ annual budget since its establishment, has now decided to approve a record 180 billion LYD unified budget to be disbursed nationwide – without much additional detail regarding how the money can be spent nationally when the country remains divided by two governments.

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