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The government dominates Libyaís socialist-oriented economy through complete control of the countryís oil resources, which account for approximately 97% of export earnings, 75% of government receipts, and 54% of the gross domestic product. Oil revenues constitute the principal source of foreign exchange. Much of the countryís income has been lost to waste, corruption, conventional armaments purchases, and attempts to develop weapons of mass destruction, as well as to large donations made to developing countries in attempts to increase Qadhafiís influence in Africa and elsewhere. Although oil revenues and a small population give Libya one of the highest per capita GDPs in Africa, the governmentís mismanagement of the economy has led to high inflation and increased import prices. These factors resulted in a decline in the standard of living from the late 1990s through 2003. Despite efforts to diversify the economy and encourage private sector participation, extensive controls of prices, credit, trade, and foreign exchange constrain growth. Import restrictions and inefficient resource allocations have caused periodic shortages of basic goods and foodstuffs. Although agriculture is the second-largest sector in the economy, Libya imports most foods. Climatic conditions and poor soils severely limit output, while higher incomes and a growing population have caused food consumption to rise. Domestic food production meets about 25% of demand. On September 20, 2004, President George W. Bush signed an Executive Order ending economic sanctions imposed under the authority of the International Emergency Economic Powers Act (IEEPA). U.S. persons are no longer prohibited from working in Libya, and many American companies are actively seeking investment opportunities in Libya. The government has announced ambitious plans to increase foreign investment in the oil and gas sectors to significantly boost production capacity. The government is also pursuing a number of infrastructure projects such as highways, railways, telecommunications backbones, and irrigation. |
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