Libya Faces $37.2 Billion Annual Funding Gap as AfDB Maps Path Beyond Oil Dependence

Libya needs an estimated US$39.3 billion each year to meet its 2030 structural transformation objectives, leaving an annual financing gap of US$37.2 billion across infrastructure, energy, education and productivity.

Libya's financial resources could help build a more diverse economy and create jobs, but turning that potential into productive investment requires changes in how public money is managed and how businesses access financing, according to the African Development Bank Group's 2026 Country Focus Report.

Titled Mobilising Libya's Development Financing at Scale in a Fragmented World, the report sets out a phased reform programme that builds on national efforts to improve fiscal coordination and modernise financial services, placing stronger public financial management, wider financial access and more varied funding sources at the centre of the country's development priorities.

A Large Financing Need Meets Heavy Dependence on Oil

Libya needs an estimated US$39.3 billion each year to meet its 2030 structural transformation objectives, leaving an annual financing gap of US$37.2 billion across infrastructure, energy, education and productivity. Infrastructure accounts for the largest share of these needs, making decisions about which projects to prepare and fund particularly significant.

Oil provides about 97% of exports, 90% of government revenues and 60% of economic activity, exposing the money available for development to production disruptions and changes in global prices. The limited development of non-oil industries restricts employment opportunities, strengthening the case for investment that helps businesses grow across more sectors.

An oil production recovery helped the economy expand by an estimated 12.4% in 2025, following a 0.4% contraction in 2024, with further production gains expected to drive growth of 6.5% in 2026 and 4.3% in 2027. Those projections depend on political, security and oil-market stability, underlining the uncertainty surrounding an economy so closely tied to one source of income.

Malinne Blomberg, the Bank Group's Deputy Director General for North Africa and Country Manager for Libya, said the country's substantial resources could support diversification if conditions allow them to finance productive investment, business expansion and employment, supported by better public financial management and broader access to finance.

Budget Coordination and Better Projects Form the Reform Base

The unified national budget agreement reached in April 2026, following more than a decade of fragmented budgeting, provides a foundation for the report's immediate recommendations on fiscal coordination. Priorities include building on that agreement, making economic data more transparent and strengthening coordination among financial institutions, giving decision-makers a clearer basis for managing resources. Medium- and long-term recommendations focus on developing digital systems and comprehensive policies to broaden the tax base and improve public expenditure management, helping Libya strengthen the way it raises and spends money as it works to reduce dependence on volatile oil revenues.

Financing opportunities identified in the report include diaspora financial flows, domestic and foreign investment, and public-private partnerships, including partnerships for climate-resilient infrastructure. Connecting those sources of money with viable projects will require stronger legal frameworks, more predictable policies and better project preparation, supported by clearly defined infrastructure priorities. These measures would help potential investors assess opportunities and give Libya a more structured way to direct financing towards its development needs, expanding the range of funding available beyond government oil income.

Wider Financial Access Could Help Businesses Grow

Progress in electronic payments, efforts to address currency shortages and the launch of the National Strategy for Financial Inclusion 2025–2029 offer a starting point for improving financial access, though businesses and underserved groups continue to face barriers. The report recommends stronger banking supervision, expanded digital financial services and capital-market development to address those constraints and broaden financing options. Prepared through consultation with the Libyan government, development partners, private-sector representatives and civil society, the report complements the Bank's 2026 African Economic Outlook and provides an analytical basis for discussions on how Libya can finance its development priorities.