Fears over the impact of lifting fuel subsidies on living costs
LIBYA – An economic report published by the Palestinian news agency Sawa has examined fears that inflation and the prices of basic goods in Libya would rise if a decision were taken to lift fuel subsidies and replace them with cash compensation for citizens, amid disagreement over how to tackle fuel smuggling and the rising cost of fuel imports.
Import costs of $1 billion to $1.5 billion a month
The report, whose main points were followed and summarised by Al-Marsad, said the debate over subsidy reform had resurfaced amid the high cost of meeting the Libyan market’s fuel needs, which it put at between $1 billion and $1.5 billion a month, and the burden this places on public finances.
Fears the increase will pass through to transport, production and prices
It pointed to concerns among broad sections of society that ending the subsidy would push up transport and production costs and, in turn, the prices of essential goods, after decades in which Libyans have grown used to low energy prices.
Reform supporters warn of drained resources and smuggling
On the other hand, the report cited supporters of reform who argue that the current system drains the public treasury and allows cross-border fuel smuggling networks to profit from the gap between domestic and international prices.
