Financial System of Libya as a Reflection of the Political Life of the Country

Abstract

The outlines of modern Libyan economy were formed after the country acquired independence and the state was established. At the beginning of the 1950s in XX century it was weak and mostly depended on some kinds of agricultural and cattle-breeding production and profit received from taxes and customs revenue. After the discovery of oil deposits and the start of the export of hydrocarbons the Libyan economy started its recovery. Then oil became the major source of income for the country's budget, it caused the fact that the country’s economy was not diversified and its other areas were not developed sufficiently. The consequences of Libya's disintegration, the economic and financial decentralization of the country were a good support for the economic recession continuing nowadays. The possibility of the diversification of the financial system and partial anti-crisis measures stimulated the government to the implementation of products and services of Islamic banking. However, the presence of the black financial market in the country and weak control on the part of the regulatory authorities do not give an optimistic sense for the near-term prospect in the economic future of the country.