Monetary Policy in Libya: A Historical Study and a Foresight Vision

Abstract

This research aims to investigate the role of the Central Bank in managing monetary policy instruments and to evaluate the efficacy of the adopted monetary policies in achieving monetary and financial stability. This is achieved by highlighting recent shifts in monetary policy trends amidst political interventions and mounting economic pressures. The study employs descriptive and analytical approaches to explicate the developments in Libya's monetary policy. Furthermore, a prospective approach is utilized to extrapolate future monetary policy trajectories in Libya and to formulate recommendations aimed at enhancing the efficiency of monetary performance and achieving greater economic stability. The findings indicate that the effectiveness of monetary policy is constrained by public revenue volatility, high public expenditure, and a lack of economic diversification, which collectively pose significant challenges to monetary stability. Consequently, the study advocates for strengthening the independence of the Central Bank, advancing monetary policy instruments, rationalizing public expenditure, and diversifying income sources to ensure economic sustainability.