On the fiscal front, the Government of National Unity (GNU) faced challenges in securing an approved budget for 2022. Nevertheless, the GNU recorded a fiscal surplus of 2.8 percent of GDP in 2022, a decrease from the 10.6 percent surplus in 2021. This decline was mainly due to increased government expenditure, particularly public wages, which rose by 42 percent.

Libya's challenging transition process has been affecting the economy and society; the country experienced a 50% decline in GDP per capita between 2011 and 2020. Absent the conflict, the economy could have witnessed, on the contrary, a high positive growth of 68 percent over the ten years growth, a possibility that remains attainable and highlights the country's enormous potential.

Since 2011, Libya's social protection system efficiency has significantly declined. As a result, coverage for vulnerable populations has become limited, and labor market outcomes have been negatively impacted. Libya's social protection sector is based on solid legal and institutional foundations and requires policy reforms to enhance its efficiency and effectiveness.

Despite facing significant challenges, Libya has a high potential for economic reconstruction and diversification, backed by considerable financial resources. This potential resides on four pillars: i) achieving a sustainable political agreement for Libya's future, ii) devising a shared vision for economic and social advancement, iii) creating a modern public financial management system for equitable wealth distribution and transparent fiscal policies, iv) and developing a comprehensive social policy that facilitates public administration reform and differentiates between social transfers and public wages. These elements will set the foundation for Libya's prosperous future.