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Libyan economy 'secure for now' in spite of the crisis in oil exports

TRIPOLI -- Libya's economy has taken a heavy hit since rebels blockaded export terminals last summer, slashing all-important oil revenues, but it has enough reserves to weather the storm for now, analysts and politicians say.

Rebel seizure of four terminals in July in pursuit of a campaign for restored autonomy for the eastern Cyrenaica region slashed output from 1.5 million barrels per day to just 200,000 bpd.

Last month, the government reached a deal to regain control of the terminals, and took over two of them with a combined capacity of 210,000 barrels per day. But it has not recovered the remaining two, which have a much larger capacity of 550,000 bpd.

As a result, exports are far from recovering and have only reached 240,000 bpd, according to the National Oil Corp.

Libya, which relies on oil for 96 percent of its GDP, says the blockade has cost the country more than US$14 billion (10.1 billion euros) in lost revenues.

On a monthly basis, the central bank estimates revenues have plunged from US$4.6 billion to only US$1 billion.

That is a serious matter for a country that imports nearly all of its basic needs, including refined petroleum products, food and other goods and services, at a monthly cost of US$3.5 billion, says central bank spokesman Issam al-Oul.

But thanks to its significant reserves, Tripoli has been able to make up the difference and should be able to for a bit more than another four years at current rates, Oul says.

Reserves now stand at US$113 billion, compared with US$132 billion at the beginning of the crisis.

The NATO-backed revolution that ousted long-time dictator Moamer Kadhafi in late 2011 took a heavy toll on Libya's economy, which has still not recovered.

More Recession in Near Term

And with the latest crisis, a recent International Monetary Fund-World Bank assessment forecast that a contraction of GDP that reached 5.3 percent last year would widen to eight percent in 2014.

And the outlook beyond this year was grim, centering on the danger of continuing disruptions to oil production, which “could degrade Libya's output infrastructure” and broader political instability.

“Turmoil is likely to further weaken the state and its institutions, and exacerbate shortages of basic services, particularly law and order,” the report says.

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