(Last updated: 1 Mar 2011)

Current business situation

Please note: Austrade’s Tripoli office, responsible for Libya, Algeria, Morocco, Sudan, Tunisia and Malta, is now temporarily closed. Trade or investment inquiries related to these countries should be directed to our Dubai office: + 971 4 508 7116.

Australians remaining in Libya are urged to remain in contact with the Department of Foreign Affairs and Trade's 24-hour Consular Operations Centre on +61 2 6261 3305 or the Australian Embassy in Cairo on +202 2770 6600.

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Libya. This is regularly updated, and should be checked before planning travel.

Country overview

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

Libya’s economic performance in recent years has been poor, as a result of sanctions, low oil prices, economic inefficiencies, excessive state intervention in the economy, and corruption.

The manufacturing sector is large, but its competitiveness and efficacy is affected by strong state economic intervention and by aging technology and processes. Libya has capabilities in areas such as chemicals, mining, minerals processing, and construction materials. Unemployment is estimated at 25-30 per cent (a figure that would be much higher if underemployment was also included), and inflation (consumer prices) at 15-18 per cent. The country’s external accounts vary, often according to oil prices, but the Government typically runs a large budget deficit.

The country was impacted by United Nations (UN) sanctions during much of the 1990s, stemming from Libya’s refusal to hand over two suspects in the bombing of Pan Am Flight 103, which was destroyed in 1989 over Lockerbie, Scotland. The United States retains some sanctions against Libya, but the UN ones – including bans on international flights and aircraft spare parts – have been removed. The sanctions limited the ability to import luxury goods or non-essentials, although as the country increasingly returns to the international fold, and its trade and living standards rise, its consumption and import demands are likely to become more sophisticated.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

Political climate

The government interferes heavily in business and trade; there are a number of import restrictions, and foreign currency allocations are heavily controlled. Due to the risk of the reintroduction of United Nations (UN) sanctions, and the lack of legal transparency, foreign companies should be very careful in committing to contracts – especially long-term arrangements – with the Libyan Government or Libyan importers.

The legal system is based loosely on Italian civil law, a legacy of Italy’s short colonial rule, although Islamic courts operate separately with limited jurisdiction.

Trade relations and statistics

Libya is not a member of any major trading blocs, receives very little development aid or assistance, and has a relatively high foreign debt. Libya has actively tried to promote itself as a link between Africa and the Arab Middle East. It is actively involved in the Organization for African Unity (OAU) and the Arab League, as well as a number of other multilateral bodies.

Libya’s international role has been constrained by United Nations sanctions and poor relations with the west, especially the US. Relations with the US have been poor since diplomatic relations were severed in 1980, and in 1986 the US undertook a limited military strike against Libya. The two countries remain at odds. Relations with Europe have improved, especially since the Lockerbie trial in 2000–2001, but are not strong. Libyan attempts to attract European investment have not met with great success, although European oil firms are keen to expand their role in the market.

Boundary disputes with several countries have also strained its regional relations, although not seriously in recent years.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.