Hafters vow to continue uncontrolled public spending – refuse to cut spending to save Libya’s economy – veiled threat to cut off oil supplies

Libya's fragmented political landscape has taken a concerning turn for foreign investors as the Haftar-aligned administration in the country's east signals its rejection of fiscal discipline measures. In recent statements to tribal leaders across eastern and central Libya, officials have doubled down on commitments to expansionary public spending despite the nation's deteriorating macroeconomic conditions—a move that threatens to deepen Libya's economic crisis and inject fresh volatility into African energy markets. The Libyan economy has been in free fall for years. Oil production, which once generated over $40 billion annually, has collapsed to roughly 1 million barrels per day (down from pre-2011 peaks of 1.6 million bpd), crippled by militia disputes, infrastructure decay, and institutional dysfunction. The Libyan dinar has lost over 80 percent of its value against the dollar since 2011, inflation has spiraled above 25 percent, and unemployment exceeds 25 percent. Standard macroeconomic policy would dictate immediate fiscal consolidation—trimming bloated public payrolls, eliminating redundant spending, and stabilizing the currency. Yet the eastern administration's explicit refusal to pursue these measures signals something more troubling: the use of state spending as a patronage mechanism to maintain political control. The implications for European investors are severe. First, this stance threatens the already