Fuel subsidy reform in Libya between economic necessity and social challenges: Tripoli as a case study

Abstract

This study examines the issue of fuel subsidy reform in Libya within a complex socio-political and economic landscape characterized by institutional fragmentation, porous borders, and pervasive smuggling. The research aims to analyze the perceptions of the Libyan public toward subsidy removal policies, focusing on the socio-economic determinants that shape societal acceptance or rejection. It explores the existing dialectic between the fiscal necessity of reform to alleviate the burden on the state budget and the structural challenges that hinder its implementation, such as the absence of public transportation, deteriorating purchasing power, and the perceived neglect of critical issues like administrative corruption and the stabilization of the Libyan Dinar.

Employing a descriptive-analytical approach, the study utilized an electronic questionnaire distributed
to a sample of 400 respondents in Tripoli. Data analysis was conducted using a suite of statistical techniques, including Cronbach’s Alpha for reliability, Exploratory Factor Analysis (EFA), Pearson’s correlation coefficients, ANOVA, Chi-square tests, and Regression Modeling. The findings reveal that concerns regarding the cost of living and the erosion of purchasing power outweigh fiscal efficiency considerations in shaping public opinion. Furthermore, the results indicate that social acceptance of reform is contingent upon effective governance, robust anti-smuggling measures, and the activation of credible cash transfer mechanisms, alongside the alignment of exchange rate policies. The study recommends prioritizing the rationalization of government spending and combating institutional corruption as fundamental prerequisites before proceeding with fuel subsidy removal.