A Historic Agreement After Over a Decade of Division
Libya’s rival eastern and western legislative bodies have signed a landmark US-mediated agreement to unify public spending across the divided nation — the first consensus on a unified state budget in more than 13 years. The deal, brokered with significant American diplomatic involvement, represents the most tangible breakthrough in Libya’s long-running political reconciliation process and could herald a new era of financial stability for the oil-rich North African nation.
The Weight of Thirteen Years of Division
Since the 2011 Arab Spring uprising that toppled Muammar Gaddafi, Libya has been effectively split between two competing administrations. In the west, the UN-recognised Government of National Unity, led by Prime Minister Abdulhamid Dbeibah based in Tripoli, held nominal authority over much of the population. In the east, the Libyan National Army and its leader, General Khalifa Haftar, backed a rival administration operating from Benghazi. Between them stood a patchwork of militias, tribal networks, and overlapping state institutions — none of which had the capacity or legitimacy to govern effectively on its own.
The absence of a unified budget meant that public resources were allocated according to factional loyalties rather than national priorities. Oil revenues were frequently contested, and the Central Bank of Libya — nominally a national institution — found itself unable to function as a neutral referee in a zero-sum political environment.
The Central Bank’s Role and the US Mediation Breakthrough
The agreement was signed by Issa Al-Arebi, representing the Benghazi-based House of Representatives, and Abdul Jalil Al-Shawish, representing the High Council of State in Tripoli. Central Bank Governor Al-Mahdi Al-Amin presided over the signing ceremony, which was widely hailed as a triumph of diplomatic persistence.
The United States played a crucial mediating role, with senior White House adviser Massad Boulos — the father of Trump’s son-in-law — instrumental in bringing both sides to the table. His involvement underscores the renewed engagement of the Trump administration in North African affairs, and the strategic importance the US places on Libyan stability given the country’s proximity to Europe and its enormous oil reserves.
Economic Context: Revenue Up, Challenges Deep
Libya generated $22 billion in oil revenues last year — a 15 percent increase over the previous year — thanks to the country producing approximately 1.5 million barrels of oil per day. The nation holds Africa’s largest proven oil reserves at around 48.4 billion barrels, and the government has set an ambitious target to increase output to two million barrels per day.
Yet the country still faces a foreign currency deficit of $9 billion — a stark reminder that revenue alone cannot solve Libya’s structural economic problems. In January, the Central Bank devalued the Libyan dinar by nearly 15 percent for the second time in less than a year, a move that reflected the severity of the fiscal imbalances and the lack of coherent monetary policy. The new unified budget agreement is expected to provide a framework for addressing these imbalances more systematically.
What Comes Next — And What Could Still Go Wrong
While the agreement has been widely welcomed, experienced Libya watchers urge caution. Political agreements in Libya have frequently collapsed under the weight of competing interests, personal rivalries, and outside interference. The fact that both sides signed a piece of paper does not mean the underlying power dynamics have shifted in any fundamental way.
Writing on social media, Prime Minister Dbeibah acknowledged the significance of the moment while tempering expectations: “This is a step that carries promising signs, but the true test remains the serious commitment of all parties, so that it translates into tangible results for citizens in their daily lives.” For ordinary Libyans — who have endured power cuts, fuel shortages, and endemic violence for well over a decade — concrete improvements on the ground will matter far more than diplomatic symbolism.
The agreement’s success will ultimately depend on whether the money is spent on rebuilding infrastructure, restoring public services, and creating jobs — or whether it becomes another prize to be fought over by competing elites. That battle is only just beginning.