According to the Libyan constitution, the General People’s Congress approves all matters related to the state budget. The top income tax rate is 90 percent; the average taxpayer is in the 15 percent bracket. The top marginal corporate tax rate is 35 percent. Over 70 percent of government revenue came from oil exports in the early 2000s.
The Board of Inspection and Popular Control has its origins in Decree 7 of the General Peoples Congress of 1988 bringing various people’s boards under its management. Law 11 of 1996, amended by Law 30 of 2001, reorganized the Board under the management of a general people’s committee. It is supposed to exercise an effective financial, administrative and technical control on all authorities.
By joining the Common Market for Eastern and Southern Africa (COMESA)’s Free Trade Area in 2005, Libya may be committed to modernizing its procurement legislation to conform with COMESA standards of transparency and free competition.
The government exerts extensive control over the banking system, though the sector was opened to private banks by a 1993, with the first private bank established in 1996. The Central Bank of Libya was to acquire greater independence in the conduct of monetary policy and banking supervision under Law No. 1 of 1373 P.D. (2005). The law, passed by the People’s Congress in March 2005, opens the door to foreign bank branches with a minimum capital of $50 million.
Law No. 2 of 1373 DP / 2005, designed to combat money laundering, establishes a National Committee, to be chaired by the Governor of the Central Bank and assisted by a Financial Information Unit established in the Central Bank.
Qaddafi, in November 2003, had called for the privatization of all sectors, including the oil sector. That Libya will seriously privatize all its economy and especially its lifeline of oil is highly unlikely, but it is clear that the country is serious in its attempt to change from a statist economy to a more market-leaning one. Three hundred public enterprises have already been ambitiously slated for privatization, an indication that Libya will most likely privatize much of its public sector and some parts of its oil sector, in an effort to attract foreign direct investment and rebuild its infrastructure. In 2002, the economy and finance ministers along with Sayf al-Islam Qadhafi, a son of Colonel Qadhafi, indicated that the objective now is to transform the economy into a market economy, through liberalization and privatization. Actual implementation of these plans remains to be seen.
International Transparency Standards
Libya does not yet participate in the International Monetary Fund's General Data Dissemination System but permitted the IMF to publish its Article IV report for 2004.