Libya - Economic development

Under Libya's first five-year development plan (1963–68), several long-run measures were taken to raise industrial production and to expand and improve the quality of agriculture. Of the government's oil revenue, 70% was earmarked for the development plan. Of this total, 23% was allocated for public works, 17% for agriculture, 16% for communications, 13% for education, 7% for public health, and 4% for industry. The 1972– 75 development plan targeted a growth of 11% annually in GDP. Investment was allocated as follows: industry and mineral resources, 15%; agriculture, 14%; communications, 14%; housing, 11%; petrochemicals, 11%; and education, 9%. The 1976–80 development plan invested principally in agriculture, 20%; communications, 14%; industry, 13%; and housing, 12%. The 1981–85 development plan called for investment in industry, 23%; agriculture, 18%; communications, 12%; and electricity, 12%. The drop in oil income caused a contraction in planned projects, however. The plan for 2001 to 2005 foresees $35 billion total of investments; mostly in hydrocarbons, power, and water; with a projected GDP growth rate of 5%.

In 1980, Libyan bilateral aid to developing countries totaled0.90% of GNP. In 1981, however, the total was only 0.39% of GNP. In 1981, Libya also contributed funds to multilateral aid organizations, principally to the Arab agencies and the OPEC Fund. As of 1987, the investments of the Libyan Arab Foreign Investment Co. included 30 companies in Arab countries. There are also significant Libyan holdings in African countries.

According to BIS, Libya increased its deposits in foreign banks in 1986, while at the same time reducing its outstanding debt. By 1989 Libya's net creditor position with BIS reporting banks had declined almost two-thirds in 1987. However, rising deposits in 1990 reflecting soaring oil revenues because of the Persian Gulf crisis, combined with reduced liabilities, led to a positive net balance. Due to the decline in oil export receipts in 1991, this surplus was reduced by one-third. Frozen assets in US banks netted $1 billion in 1994. The 1999 lifting of sanctions saw increased foreign investment.

In 2003, the government was considering plans to diversify the economy away from its total dependence on oil, which accounts for 95% of Libya's foreign currency. Tourism is one sector of the economy targeted for development, and those working in the industry have encouraged the formation of commercial banks to finance tourism projects. The Tourism Development Bank, 80% of whose shares are held by the private sector, is one example of this initiative. Col. Qadhafi in 2003 urged Libyans to undertake investment projects such as road and port projects, and communication and industrial production projects. The oil sector was not to be privatized, but rather open to investment, while the public sector would not be entirely dismantled, but would work with the private sector. Qadhafi reaffirmed the need to establish people's socialism as the foundational economic structure of society, whereby companies would not be owned by the state, but by the people who run them, assisted by foreign investors if need be. Libya initiated a $35 billion investment plan for 2002–05. In 2003, Libya indicated it intended to apply for membership in the WTO.

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