Libya faces economic challenges despite having world's cheapest gasoline

Libya currently offers the world’s cheapest gasoline, with prices averaging approximately $0.088 per gallon. This ranking, reported by Global Petrol Prices, places Libya ahead of Iran and Venezuela. The low costs are primarily driven by extensive government subsidies, which cost the Libyan state an estimated $7 billion annually. However, these subsidies create significant economic strain, including the loss of up to 30% of subsidized fuel to cross-border smuggling due to the vast price gap between Libya and its neighbors.

Simultaneously, the African Development Bank (AfDB) has highlighted the urgent need for Libya to diversify its economy to reduce its heavy reliance on the oil sector. Currently, oil accounts for roughly 97% of exports and 90% of government revenue. The AfDB estimates that Libya requires approximately $37.2 billion per year to finance essential sectors such as infrastructure, energy, and education. To achieve structural transformation, the bank recommends improving public financial management, increasing economic data transparency, and creating conditions that support non-oil productive investments.