The economic fallout of Russia’s war on Ukraine is reverberating across the world, affecting global and national markets, trade, inflation, and food security. Although Libya is more than 2,700 kilometers (1,700 miles) away, everyday Libyans are feeling the impacts. To better understand how events in Russia and Ukraine are affecting Libya’s economy, USAID’s Libya Public Financial Management (LPFM) activity is conducting monthly analyses on the price of key commodities like grain imports and oil (the country’s largest export).
Initial projections in February and March indicated that rising oil prices would lead to a $12.5 billion trade surplus. However, after the blockades of the Al-Feel and Sharara oil fields, and the Zueitina and Brega oil ports, in April, LPFM revised the projections to reflect changes in Libya’s oil production and exports. The results show that the trade surplus will be significantly lower than last year due to the blockades, but will remain positive at $4.9 billion—slightly higher than last year’s returns of $4.2 billion.
USAID is also tracking the impact of lost wheat and grain imports from both Russia and Ukraine, which together account for more than half the country’s supply. Bread is an important staple in Libya. Currently, products like bread, pasta, rice, and couscous remain available, but prices are expected to increase by 30 percent. According to LPFM estimates, the effect is likely to add an extra 1.4 percent to inflation—pushing Libya’s overall inflation rate to approximately 9-12 percent in 2022.
USAID also conducted a workshop with the Central Bank of Libya (CBL) to address the shifting economic conditions and their impact on the monetary planning processes. Participants applied the USAID-developed financial forecasting models to changing variables including inflation, oil revenues, and commodity cost projections. By using more accurate and nimble tools and analyses, USAID is helping the CBL establish a more robust macroeconomic infrastructure to address immediate macroeconomic pressures–including those posed by the war in Ukraine–while supporting longer-term economic stability.
