Macroeconomic turmoil lays groundwork for social unrest in Libya

Since there does not seem to be any quick resolution to the crisis surrounding the Central Bank of Libya (CBL), the country is poised to experience macroeconomic shocks in the next weeks, which could potentially create important social unrest —or at least a socio-economic crisis. Any unrest would hardly be controllable by political interests and would target all Libyan stakeholders, without managing to change much to the political landscape.

A closer look

The summer break is now over in Libya as schools are reopening. This time in an ever more uncertain landscape, where the foreign exchange has passed the 8 LYD to USD point and where prices are slowly but surely rising. This relates to the rate when exchanging via bank checks, which is what most Libyans use to get foreign currency. Interestingly, the sense of alarm is not yet fully palpable among Libyans, notably since the electricity and fuel crises experienced over the summer are now stabilising due to supplies of fuel from eastern ports.

Nonetheless, the risk of such energy shortages remain high and people face uneasiness regarding the near future. Poor weather conditions have resulted in heavy rain that caused floods in Sebha, just weeks after the same happened in Kufra. The memory of Derna’s natural catastrophe is still fresh, and these natural occurrences are met with anxiety by many who no longer trust the quality of their infrastructure against bad weather. In fact, Libyans feel underprepared for the upcoming rainy season and harsh rains have already hit the green mountains and parts of western Libya this week as well. The country’s political divisions seem deeper than ever and make any rapid response to crises more difficult.

Upcoming macroeconomic shock