Fuel subsidy reform proposal presented to Serraj government
By Sami Zaptia.
London, 3 March 2020:
The Ministry of Economy aligned to the internationally recognized Libyan government in Tripoli led by Faiez Serraj yesterday presented its government a proposal for the reform of the current fuel subsidies.
The proposal comes in accordance with the economic reform programme that the Serraj government has been implementing September 2018 which included subsidy reform.
The Ministry of Economy reiterated that Libya’s Qaddafi-era fuel subsidies are a distortion to the national economy as about 40 percent of these subsidised fuels are smuggled outside the country and they cause a price distortion in the Libyan market.
The proposal plans to replace in-kind subsidies with monetary subsidies, where the price subsidy is removed from fuel prices and paid directly to Libyan citizens. The Ministry said this will to achieve several advantages, the most important of which are.
- The principle of equity in distribution and ensuring that subsidies reach those who need it.
- Reduction of consumption by about 30 to 40 percent.
- Elimination of the phenomenon of fuel smuggling.
- The reduction of the foreign exchange fuel purchase bill by about 25 percent.
- The conviction of citizens of the need to replace fuel subsidies through the questionnaires carried out by the Ministry.
- The reforms would take into account the interests of both the state and the citizen simultaneously.
The Ministry said that its proposal includes the value of the cash subsidy, which it did not publicize, and the distribution mechanism to citizens. It said that ensuring the ability of the Central Bank of Libya will have to ensure that it has the money available to deliver to citizens through the banking in a smooth manner to ensure the success of the fuel subsidy reform programme.