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French Version

Libyans lambaste spike in fuel and power costs

Prime minister defends policy as necessary to rejuvenate economy

Libyans say the government's decision to raise fuel and electricity prices will cause the cost of living to soar, but Premier Shukri Ghanem insists the hikes are needed to lift the economy out of the doldrums. At the beginning of May, the price of fuel at the pump jumped 30 percent, and the price of electricity has doubled for consumers of more than 500 kilowatts per month.

"One can't spend too much time fussing over what people want when we need to lift Libya's economy out of stagnation that has paralyzed this country for years," Ghanem told AFP.

The prime minister said the government spends 7.5 million dinars ($4.8 million) a year to subsidize a list of goods.

"We have to bring prices closer to what the goods actually cost, little by little," he said.

The plan is part of Libyan leader Moammar Gadhafi's June 2003 decision to privatize many public companies and bring an end to the interventionist economy.

Libya endured years of economic sanctions because of international allegations that Tripoli sponsored terrorism.

The North African country is governed by a socialist regime, crafted by Ghadhafi who since last year has mended fences with the West.

"My salary is less than $160 a month," said Al-Hadi al-Mabrouk, a teacher.

"Fuel and electricity are eating up a third of that, so what do I have left to support my four children?" he asked, adding that salaries have not risen in 30 years.

The prime minister says salary hikes are decided on by legislators.

"The decision to raise salaries is not up to me. It's parliament's duty to amend the law in this area," he said.

According to the dean of Tripoli's economics faculty, Hafez al-Shuwaili, the previous prices were compatible with the average Libyan annual salary of less than $3,000.

"But when the government decided to change policy and stop subsidizing goods, prices soared and it created an imbalance because salaries didn't rise along with costs," he said.

"This measure wasn't studied and was imposed too quickly," charged Shuwaili.

But Ghanem said the decision to raise prices was based on an extensive study, and he maintained that the rise is mild compared with what goods actually costs.

According to the prime minister, a liter of gasoline at the pump costs a consumer $0.11, when the true cost is actually $0.20, and a consumer pays $0.04 cents for a kilowatt of electricity that really costs $0.12.

"Consumers must pay a share of the costs and try harder," Ghanem said. But many Libyans disagree.

Youssef Shakuna, president of the African investors' union, believes there is no reason to raise prices in a country where oil revenues top $20 billion per year.

Tripoli also says it is seeking to invest more than $60 million worth of reserves.

Shakuna says the state is not likely to save more than $198 million per year with the current price hike.

"This amount won't get the economy back on its feet, but it will create a burden for a population already suffering from unemployment," Shakuna said.

"How can they kickstart the economy at the expense of poor people?" asked Osama Mohammad, a civil servant.

Abdel-Salam al-Traboulsi, a doctor, said the decision to raise prices without consulting the people amounted to a "capitalist tsunami."

Beirut,05 30 2005
The Daily Star
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