Libya budget crisis as oil revenues plunge 80%

"We are now facing an economic crisis" that could force the government to "take out loans and not be able to honour its obligations on payment of salaries," Prime Minister Ali Zeidan said

Libyan oil revenues, which fund nearly all government spending, have plunged by 80% since protesters began blocking oil terminals in July, creating a budget crisis, the premier said today.

"We are now facing an economic crisis" that could force the government to "take out loans and not be able to honour its obligations on payment of salaries," Prime Minister Ali Zeidan told journalists.

Protesters, with grievances ranging from demands for autonomy for the eastern region of Cyrenaica to calls for great constitutional protections for the Berber minority, have been blocking oil and gas export terminals since the end of July.

And the National Oil Co said earlier this month that oil output is estimated to have dropped to 250,000 barrels per day from 1.5 million bpd previously.

Zeidan said "oil revenues have plunged to 20% (of normal levels), meaning the budget is no longer 68 billion dinars ($55 billion) because it was calculated on the basis of (expected) annual revenues.

"We have not been able to spend the 68 billion dinars of the budget, which has caused disruptions in some parts."

Zeidan did not spell out how the state was managing to keep up the rest of its planned spending, which is normally 96% dependent on oil revenues.

The premier's assessment was much bleaker than one just two weeks ago by Economy Minister Moustapha Abou Fnas, who said the government had sufficient resources to cover its outlays.

"The petroleum crisis will certainly have negative effects on the economy, but will not affect government spending," such as on salaries, he said on November 14.

"The state has other resources" to cover the deficit gap, he said, without elaborating.

Abou Fnas said the blockades had cost the economy 8 billion dinars ($6 billion) since they erupted.

But MP Souleiman Kajem has said the losses exceeded $13 billion.

Economic growth in the North African country surged by 104.5% last year, compensating for a massive contraction of 62.1% in 2011, the year dictator Moamer Kadhafi was toppled.

The International Monetary Fund has forecast that GDP this year will fall by 5.1% as a result of the disruption to oil production.