Oil producer Libya plans to increase budget spending by 32% to a record 58 billion dinars ($46.6 billion) this year, a government spokesperson said.
The government did not give a reason for the increase but some other energy exporting countries have been ramping up public spending to try to prevent the fall in world oil and gas prices from curbing economic growth.
Government spokesperson Mohamed Bayou said the spending figure was contained in a 2010 budget law being prepared by the General People’s Committee, as the government is known. Last year’s budget spending was 44 billion dinars.
Bayou said the government in Libya, home to Africa’s biggest proven oil reserves, continued to subsidise some consumer goods and that it was committed to continuing investment in infrastructure and public services.
“The budget for this year will be about 58 billion Libyan dinars,” Bayou told Reuters after a session of the General People’s Committee. “This is the biggest budget.”
He also said the government would be spending 82 billion dinars ($65.86 billion) of budget funds over the next three years on development and infrastructure projects.
Libya has room to manoeuvre on spending because it built up substantial reserves during several years of high oil prices.
Asked about the increase in budget spending, Sami Zaptia, an analyst with the Know Libya consultancy, said: “This is quite a big jump but really Libya has a lot of savings. It’s sitting on a pile of cash.”
He said the recovery of the oil price in the past few weeks to about $70 a barrel had reassured the government. “Money is coming in therefore we can afford to put our foot down and raise spending,” he told Reuters.
“We need to finish ring roads, housing, the airport, to push ahead with the plan to have more tourists, be a hub for north-south travel and diversify away from oil.”
Libya’s gross domestic product (GDP) grew 3.37 % in 2008 but it fell back to 1.75 % last year, according to International Monetary Fund data. The fund forecasts 5.2 % GDP growth in 2010.
Libya’s government is in session this week to discuss implementation of decisions adopted earlier this year by the General People’s Congress, or parliament.
The spokesperson said the government was also preparing to issue laws, approved by parliament, on encouraging investment and organising economic activity, though he did not give specifics about what the legislation would contain.
The laws “will set out a clear, appropriate legislative framework for the diversification of the Libyan economy,” said Bayou. “The target is to achieve economic stability in Libya.”
Libya, which has been led since 1969 by Muammar Gaddafi, has been trying to reduce its dependence on oil and gas exports. As part of that effort it has taken steps to open up its economy to foreign investment outside the energy sector.
International energy firms including BP and Exxon Mobil have invested billions of dollars in Libya. The North Africa country is also starting to attract foreign investment to its retail, construction and financial sectors.