Public Finance and the Challenges of Continuing to Finance the Fuel Subsidy Program

Abstract

This study aims to analyze the general budget expenditures in Libya for the year 2023, focusing on the fuel subsidy program, which constitutes a significant portion of government spending. The study examines the impact of subsidies on the Libyan economy and how they have become a financial burden due to the excessive reliance on oil revenues, leading to structural imbalances in the budget. It also explores how the unstable political and economic environment affects the effectiveness of the program, with a detailed review of budget figures, expenditure distribution, and revenue allocation.

The study concludes that maintaining the subsidy program in its current form poses a long-term challenge to public finances, particularly in light of the volatility of oil prices. While subsidies play an important role in maintaining social stability and alleviating the financial burden on citizens, they hinder sustainable economic development. Moreover, the heavy dependence on oil revenues exposes the budget to persistent deficits and limits the government's ability to invest in vital sectors such as education, health, and infrastructure.