Inflation in the Libyan economy: its causes and effects. An analytical study of publications by the Central Bank of Libya during the period 2009-2016.

Abstract

Inflation is considered one of the most significant crises facing all countries, regardless of their economic strength. Most developed and developing nations have experienced this crisis, but by implementing economic plans tailored to the needs of the time, they have been able to recover and revive their economies. The Libyan economy in the period following 2011 is a prime example of a country suffering from this phenomenon, which has worsened and become a crisis threatening the very existence and sustainability of the Libyan economy. This study primarily aims to identify and discuss the causes of inflation and its effects on the Libyan national economy. The study employs a descriptive and analytical approach, examining publications and statistics from the Central Bank of Libya during the period 2009-2016. This data is analyzed according to economic and accounting standards for inflation in an attempt to understand the repercussions of this crisis and to deduce the underlying causes. The study reached several important conclusions, namely that relying on a single source of revenue for foreign currency—oil exports—and importing all direct and indirect consumer goods from abroad, coupled with the lack of legal controls on the entry and exit of goods through sea, air, and land ports, and the prevailing security instability, led to the emergence and exacerbation of the inflation crisis. This crisis negatively impacted the level of public services and economic activity in Libya. The researchers also offered recommendations that could assist decision-makers in ending or mitigating the inflation crisis.