Overview
Libya, an oil-rich country strategically located at the crossroads of Africa, the Middle East, and Europe, holds significant yet largely untapped development potential. However, a prolonged period of political instability and institutional fragmentation following years of conflict has weakened governance and eroded development gains. Despite its classification as a middle-income country, Libya’s development indicators and public service delivery do not reflect its resource wealth. Basic services such as health, education, water, and electricity remain uneven and often inadequate, with stark regional disparities and growing social vulnerabilities. High unemployment, rising poverty risks, and widespread concerns about corruption further compound these challenges.
The country’s development trajectory remains closely tied to its hydrocarbon-dependent economy, which accounted for the majority of GDP, exports, and government revenues in 2024. While economic growth is expected to rebound in 2025 following a contraction, driven largely by increased oil production, this recovery does not fully translate into inclusive development outcomes. Fiscal constraints, including the absence of a unified national budget and reliance on short-term spending mechanisms, continue to limit investment in reconstruction and social services. Moving forward, Libya will need to address deep-rooted structural challenges, including diversifying its economy, strengthening public financial management, reforming subsidies, and fostering private sector growth. Achieving sustainable and inclusive development will depend on improved political stability, stronger institutions, and coordinated efforts to rebuild infrastructure, enhance service delivery, and create economic opportunities beyond the oil sector.
Source: World Bank, 2025
On Sunday, September 10, 2023, a devastating natural disaster unfolded in eastern Libya when Storm Daniel wreaked havoc with heavy rains and fierce winds.
The storm’s initial impact was felt across coastal cities of the northeast, including Benghazi, Sousse, and Al-Marj. However, the most catastrophic event occurred during the night of Sunday, September 10 to September 11, when two dams upstream of the coastal city of Derna, situated on the Wadi Darnah River, tragically failed.
This led to the release of millions of cubic meters of water downstream, inundating the river plain and resulting in extensive flooding in Derna, a city inhabited by approximately 100,000 people. The flooding caused the complete destruction of entire neighbourhoods, some of which were reported to have been swept into the Mediterranean Sea. The damage to buildings and infrastructure has been reported as severe, and numerous roads have been rendered impassable.
The death toll reportedly exceeded 4,000, with more than 10,000 individuals still unaccounted for, and at least 34,000 people displaced from their homes. This catastrophic event in the eastern part of the country has unfolded during a period of continued descent into violence, political stalemate, and division.
Read more about our response here.
Source: World Bank 2023
