Libya faces economic strain from wage disparities and oil dependence

Libya is facing significant economic challenges characterized by extreme wage disparities and a heavy reliance on oil revenues. Data from the Central Bank of Libya indicates that oil sales and taxes accounted for approximately 97% of total public revenues during the first eight months of 2026.

The country's economy is struggling with a massive inflation of the wage bill, which grew by 263% between 2020 and 2025, while GDP increased by only 25.9%. This imbalance has contributed to a fiscal deficit of 30% of GDP and a public debt reaching 146%. High public sector spending is a primary driver, with salaries totaling 46.9 billion dinars recorded in the first budget chapter alone, excluding August payments.

In response to these inequities, members of the Libyan House of Representatives have called for the unification of salary scales across different state sectors. Proponents argue that a unified system is necessary to achieve social justice and address the gap between various public employees, though they suggest maintaining specific allowances for high-risk or specialized roles. Experts warn that directing oil wealth toward consumption rather than productive investment continues to weaken the Libyan dinar and the overall standard of living.