Libya–World Bank Economic Reform Talks Aim to Attract Investment
In Washington last week, a Libyan government delegation met with World Bank officials to shape next year’s annual work plan in line with Tripoli’s unity government agenda. The talks were led by Mahmoud al-Futaisi, the prime minister’s economic adviser, along with Finance Minister Khaled al-Mabrouk and State Council member Ibrahim Sahad. According to Libyan officials, the discussions focused on designing practical joint programs and exploring “alternative investment guarantees” to attract investors, particularly for renewable energy and other large-scale development projects. Sahad told reporters that Libya’s quest for unity and stability now stands “at a critical crossroads,” and that continued U.S. engagement would be essential for inclusive governance and sustainable development. Al-Mabrouk added that he expected an ongoing and substantive dialogue with the United States on Libya’s economic transformation, calling the trip evidence of the “enduring importance” of U.S.-Libya relations.
The delegation presented the visit as a confidence-building and planning exercise ahead of 2026. But behind the official platitudes lies a more complicated reality. Libya’s economy, while rich in oil, was battered by more than a decade of conflict and divided politics. According to World Bank data, oil and gas still account for roughly 60 percent of Libya’s GDP and nearly all of its exports and government revenue. In practical terms, that means most of the public budget depends on oil income. The private sector remains tiny (about 14 percent of the workforce), in part because state-owned companies and factional militias dominate many industries. Public services remain weak: citizens routinely contend with erratic electricity, scarce clean water, limited health facilities and an outdated education system.
The World Bank notes that Libya was left “mired in a political stalemate” by years of conflict and competing administrations. In 2024 the economy contracted by about 3 percent as oil output fell, and only late in the year did oil production surge by roughly 35 percent after rival central bank authorities resolved a standoff. Even with that rebound – the National Oil Corporation aims to raise output further in 2025 – the challenges are stark. Infrastructure needs rebuilding, and the state’s massive budget deficits offer little room for investment. In fact, gross capital spending by the government plunged in 2024 while wages and subsidies absorbed most revenue. The Bank emphasizes that long-term recovery will depend on strengthening institutions: its strategy for Libya stresses building government capacity, transparency and effective public systems as preconditions for peace and growth.
In that context, this week’s meetings were meant to align international support with Libya’s reform agenda. Officials in Tripoli hope the Bank can help design and perhaps finance projects in energy, infrastructure and economic diversification. The mention of renewable energy and investment guarantees reflected a desire to tap new funding and technology. The delegation also participated in related Washington events (at the Atlantic Council and elsewhere) aimed at attracting U.S. interest in Libyan stability and business deals. For example, Libya recently opened talks with private firms about refurbishing its power grid and ports, and it has formed a Libya Development Trust Fund with Germany and the UK (in December 2023) to pool donor efforts.
Nonetheless, real reform will depend on conditions at home. The outreach came just one day after Libya’s two main rival bodies approved a long-delayed agreement on development spending. On Nov. 18, representatives of the eastern-based House of Representatives and the Tripoli-based High State Council signed a framework for a “unified development program”. Libya’s Central Bank said this deal establishes a clear framework for unifying spending channels and allocating funds for development projects, a bid to channel oil revenues jointly rather than in competing budgets. But the agreement highlighted how exceptional such cooperation has been: for more than a decade, Libya’s east and west ran parallel governments with separate budgets, and the two chambers had never agreed on a common development plan.
Governance amid Division
Even with these steps, the political split runs deep. The internationally recognized Government of National Unity (GNU), headed by Prime Minister Abdul Hamid Dbeibah, effectively controls only the western part of the country. In the east, the Parliament and its officials no longer accept the GNU’s authority. The UN-brokered plan of 2021 set up the GNU as a transitional government and promised nationwide elections by late 2021, but those elections never took place. In effect, Libya has lurched from one interim arrangement to another. Efforts to reconcile rival administrations have repeatedly stalled – a source in Washington worries that as long as the two sides jockey for power, any outside investment will be hard to coordinate.
The persistence of division colors Libyans’ view of the Washington outreach. One can’t help but wonder whether pledges of partnership will translate into anything tangible. U.S. visa restrictions remain in force – Libya was among the countries listed in a 2025 U.S. proclamation barring entry – even as their leaders seek American investment. Social media commentators have questioned whether the delegation’s meetings will yield real projects or merely bolster the profiles of individual officials. Such skepticism reflects a sense, not unfounded, that foreign engagement can only go so far without agreement on elections, budgets and accountability at home.
For all these reasons, the World Bank and donors will be watching closely. The Bank’s Libya strategy makes clear that it expects to help build the capacity of the government to manage public funds and to promote transparency and inclusion in decision-making. That means any lending or support will likely be tied to reforms in budgeting and governance – a tall order given Libya’s political climate. Tripoli’s delegation in Washington implicitly promised it will take those steps. But the true test will come in implementation. If Libyan officials can translate the joint plan into action by unifying institutions, attracting investment, and rebuilding public services, then the U.S. meetings will be seen as a turning point. If not, they may amount to little more than another round of hopeful diplomacy in a country still struggling to put its economy and politics on a stable footing.
