By Sami Zaptia.
Tripoli, 30 September 2013:
Leading GNC member and member of its influential Security Committee, Abdulmonen Alyaser, pulled no punches during . . .[restrict]a TV interview this week in which he highlighted the dangerous path the Zeidan government was taking.
He said that the IMF team had raised the ‘’red flag’’ regarding the direction in which the Zeidan government was taking Libya.
Alyaser expressed his great concern about the growing wages bill that Libya was facing made worse by the Zeidan government’s recent announcement of a 20 percent increase.
The GNC member had grave concerns for the Libyan government’s ability to pay for all its policies from the 2013 budget and especially in view of the crippling oil strikes that have reduced Libya’ oil revenues – its only real source of income.
Alyaser’s concerns were echoed by other GNC members. Speaking off record other GNC members were equaliy critical of the current Prime Minister and his “short termist” policies.
“Zeidan wants to buy himself out of his political and security problems by spending all of Libya’s savings”, a GNC member confided in Libya Herald anonymously. “What even the dictator Qaddafi saved in decades – nearly LD 200 billion – Zeidan is going to waste on wages and subsidies in a two or three years”, one irate GNC member told Libya Herald.
Moreover, the Prime Minister and parts of his government were ‘’in denial’’ about the gravity of their wage increases and enlarged state sector employees. They just don’t appreciate the complex economic and fiscal ramification of their policies and had their ‘’head in the sand”, one source told Libya Herald.
Another GNC member told Libya Herald that all Zeidan was concerned about was “getting to the end of his time in office at any cost with Libya intact. Whoever is in power can pay the rent”, he said quoting a popular Libyan proverb.
Despite all the talk of the activation of the National ID number, apparently little evidence has been shown that there has been serious reduction of wage duplication.
There is much truth to what the GNC member told Libya Herald. Whilst the amount and the time frame maybe slightly inaccurate, sources have revealed to this publication that the IMF team were “shocked” by the spending figures of the Zeidan government.
A GNC member told Libya Herald that Libya would soon have to go “begging” to the World Bank for a loan like its Arab Spring neighbours if it carried on at this current spending rate.
The IMF apparently told the Libya authorities – those who would listen and who could appreciate the consequences of over spends on wages and subsidies and the deficits they would leave as a legacy for future generations – that they needed to take corrective action immediately if they are to control the anticipated deficit of 2013.
Sources also revealed to Libya Herald that the IMF questioned the ‘’rosy’’ scenario of the NOC on realistic oil production rates for the rest of 2013 and over the next four years. Obviously, neither the IMF nor the Libyan authorities had anticipated that oil production would be disrupted to such an extent.
The IMF were also apparently very concerned by the Zeidan government using the development budget for wages. Dipping into the development budget means that there is no hope of the construction and development sector contributing to the economy and the national revenue.
That would also mean that there is no hope that the private sector and the construction sector can create jobs and reduce the pressure on the state to provide jobs and ease the anticipated deficit. This has consequences on growth in 2014 and subsequent years.
The GNC members said that the IMF was particularly surprised and displeased in view of the quite positive outlook they had given Libya in their last report. It seems that the Libyan authorities had put the report on the shelf and gone in completely the opposite direction.
The IMF was concerned that the Libyan legislature was not taking the long term view regarding Libya’s reserves and savings. They were surprised that no legislation had been put in place to protect savings from governments bowing to populist (or in Libya’ case even armed) demands.
A leading GNC member confirmed to Libya Herald last night that GNC President Nuri Abusahmien had even failed to meet the IMF team –a courtesy that is usually afforded to a premier international organization such as the IMF and that was offered by his predecessor Mohamed Magarief during their last visit.
No one from the IMF was available for comment. [/restrict]