1. Libya Economy and
Political
Risk Tier
Dr Yousef Elshrek

2. • The Country Risk Tier (CRT) reflects A.M. Best’s assessment
of three categories of risk: Economic, Political and Financial
System Risk.
• Libya is a CRT-5 country and has very high levels of political,
economic and financial system risk
• Libya’s economy remains heavily dependent on oil.
• The Libyan hydrocarbon industry accounts for more than
95% of merchandise exports, 80% of government revenues
and more than half of gross domestic product.
• Political upheaval and civil war in Libya began in February
2011.
• The removal of Muammar al-Qadhafi in August of 2011 was
followed by the newly elected General National Congress
which is attempting to establish a new system of governance,
a revised constitution and provide leadership and direction.

3. • Economic Risk: Very High
• Libya experienced an extremely
sharp contraction of 62% in
economic activity in 2011 as the
political revolution and civil war
disrupted all forms of business
activity, including oil production.
• The economy has recovered
strongly with 104.4% growth in
2012, driven by oil production
coming back on line.
• Libya’s economy remains heavily
dependent on oil.

4. • Political Risk: Very High
• Security remains a key concern in
Libya, with limited control over lingering
tribal rivalries who are now heavily armed as
a result of the recent revolution.
• High unemployment, shortage of housing
and mismanagement of oil revenues are
paramount problems for the current
government.
• Periodic
shutdowns
of
Libyan
oil
production, strikes and increased protests
have increased instability in the country and
created a large fiscal deficit, limiting the
governments ability to provide much needed
food, medicine, electricity and wages.
• Formation of a working government will be
difficult due to the nascent political groups.
• The rebuilding of infrastructure needs to be a
key priority for the newly formed
government.
Source: A.M. Best

5. • Financial System Risk: Very
High
• The Libyan insurance industry is
supervised by the Insurance Supervision
and Controlling Authority (ISCA) of the
Public Committee for Economy Trade
and Investment.
• Libya’s financial system remains heavily
under state influence and foreign
investment is subject to numerous
restrictions.
• Much of the foreign direct investment left
the country in 2011 and has been slow to
return as many investors wait for clarity
on the political situation as well as

6. • Source : AMB Country Risk Report 2013