Ejemplo del modo de iniciación recomendado para una aplicación cliente del sistema GADEA.

Public economics’ literature has many approaches in examining the public sector of an economy. These approaches are concerned with the nature (source) of government resources, the amount of these resources, how to allocate it, and the goals that a government seeks to achieve through this spending. Since Adolf Wagner, in 1883, identified “the public economy in terms of its function and need of private resources to fulfil this function” (Ott and Cebula, 2006; xvii), the study of public economics has focused on the identification of which function should be accomplished by the government and which should be left to the private side. Moreover, there is a need for adequate funding for this function to be implemented (Ott and Cebula, 2006). Therefore, most theoretical and empirical literature on public sector economics that has emerged since the first decade following the Second World War has concentrated on the second and the third of these approaches. This, on one hand, may be partly due to the availability of official information and the ease of its measurement and, on the other hand, can be ascribed to attempts by economists to define a comprehensive theory of the state (as mentioned above) around the notion of ‘market failure’ (Buchanan, 1999). Accordingly, the above mentioned approaches will be utilized in the analysis of the structure and growth of the public finance sector in Libya during the study period.

34 Table 2.4 Data on fiscal operations

Millions L.D

Source: 1- LCB Annual Reports, and Economic Bulletin, various issues, 2- National Accounts, various issues

Taking into account the special situation of Libya as a developing country dependent on oil as the main source of income, where the

fiscal policy in oil exporting countries can be profoundly affected by oil revenue uncertainty and volatility. Policy formation should factor in the exhaustibility of

YEAR CGC IGC EXTBUD GETOT NGOILRGOILROTHREV GYTOT BUD GOILRG GETOTG GYTOTG

1970 220.7 122.6 52.7 396 75.6 484 10.9 570.5 174.5 0 0 0 1971 318.4 208.5 39.5 566.4 77.6 652.3 14.3 744.2 177.8 0.3477270.430303 0.30447 1972 359.1 338 80.7 777.8 104.3 624.6 3.7 732.6 -45.2 -0.042470.373234-0.01559 1973 465.4 499.8 254.7 1219.9 137 604.1 9.1 750.2 -469.7 -0.032820.5683980.024024 1974 864.8 780.4 549.7 2194.9 220.8 1474.1 8.9 1703.8 -491.1 1.4401590.7992461.271128 19751044.3 834.2 1159.7 3038.2 294.1 1324 10.2 1628.3 -1409.9-0.101820.384209-0.04431 19761184.6 1029.6 945.5 3159.7 339.4 2077.3 44.7 2461.4 -698.3 0.5689580.0399910.511638 19771400.3 1171.5 994.2 3566 394.4 2625.9 28.8 3049.1 -516.9 0.2640930.1285880.238767 19781691.8 1284.4 1202.6 4178.8 480.7 2183.5 21.4 2685.6 -1493.2-0.168480.171845-0.11922 19792006.6 1672.6 1528.1 5207.3 585.1 3682.2 55.5 4322.8 -884.5 0.6863750.2461230.609622 19802442.3 2556.3 2260 7258.6 805.1 5951.1 52.3 6808.5 -450.1 0.6161810.3939280.575021 19812551.6 2872.6 2467 7891.2 1089.9 3685 317.3 5092.2 -2799 -0.380790.087152-0.25208 19822456.3 2365.9 1511 6333.2 950.3 3230 241.7 4422 -1911.2-0.12347-0.19744-0.13161 19832380.9 2096.3 839 5316.2 929.1 2520 268 3717.1 -1599.1-0.21981-0.16058-0.15941 19843158.5 1834.7 1130 6123.2 1046.2 2125 273.9 3445.1 -2678.1-0.15675 0.1518 -0.07318 19852229.2 1523.3 1200 4952.5 766.7 1846 399.3 3012 -1940.5-0.13129-0.19119-0.12571 1986 2055 1117.1 1100 4272.1 730 1074 401.3 2205.3 -2066.8 -0.4182 -0.13739-0.26783 19871615.8 788.4 1100 3504.2 665.4 1029.7 426.5 2121.6 -1382.6-0.04125-0.17975-0.03795 19882195.7 722.4 1100 4018.1 947.5 898 503.1 2348.6 -1669.5 -0.1279 0.1466530.106995 1989 2520 823.4 800 4143.4 1013.61181.5 456.7 2651.8 -1491.60.3157020.0311840.129098 19901997.4 702 700 3399.4 691.5 1386 363.9 2441.4 -958 0.173085-0.17956-0.07934 19912375.7 723.3 625 3724 809.5 1993 68 2870.5 -853.5 0.4379510.095487 0.17576 19922755.4 608.5 452.2 3816.1 782.2 2230 600 3612.2 -203.9 0.1189160.0247310.258387 1993 2132 1317.8 403 3852.8 865.9 1267 620 2752.9 -1099.9-0.431840.009617-0.23789 1994 2254 1417.8 528.4 4200.2 974.7 1410 1255 3639.7 -560.5 0.1128650.0901680.322133 1995 2383 1023.9 1582.5 4989.4 1053.8 2284 1400 4737.8 -251.6 0.6198580.1878960.301701 1996 2903 1389.8 617 4909.8 1085.4 3888 1696 6669.4 1759.6 0.702277-0.01595 0.4077 1997 3333 1443.2 737 5513.2 1117.1 3351 1686 6154.1 640.9 -0.138120.122897-0.07726 1998 3339 1137.5 817 5293.5 1228.1 2551 1815 5594.1 300.6 -0.23873-0.03985 -0.091 19993101.6 1254.9 796 5152.5 1284.73444.4 1412.6 6141.7 989.2 0.350216-0.026640.097889 20003615.9 1912 709 6236.9 1181.4 2203 2459.2 5843.6 -393.3 -0.360410.210461-0.04854 20013529.7 5702.9 496 9728.6 1069.3 3603 2395.8 7068.1 -2660.50.6354970.5598450.209545 20023922.8 7970 575 12467.81079.1 6551 2023.1 9653.2 -2814.60.8182070.2815620.365742 20033825.6 8158.7 758.5 12742.81275.4 3929 2984.6 8189 -4553.8-0.400240.022057-0.15168 20045912.9 8749.1 3792 18454 1890.2 19956 3131 24977.2 6523.2 4.079155 0.44819 2.050092 2005 6573 11145 2788 20506 1837.3 34378 2728 38943.318437.3 0.722690.1111950.559154 2006 7610 11946.3 1285 20841.31972.5 43566 3523 49061.528220.20.2672640.0163510.259819

35

the natural resources and aim at reducing oil revenue volatility passed on to the economy (Baunsgaard, 2003; 1).

The public finance sector in Libya comprises three budgets: firstly, a development budget, which is related to the implementation of the development plans.

These plans are prepared by the Planning Board and are thoroughly evaluated by the legislature. Secondly, the administrative budget includes ordinary expenses and the revenue of the government in addition to transfers to, and from, the municipalities and public enterprises.

Finally, the foreign trade budget officially is a commodity budget. This budget was introduced in 1982 as an instrument for allocating foreign currency to priority sectors (Khader, 1987; 203).

The public sector has traditionally played a pivotal role in the Libyan economy where the overall performance of the entire economy has benefited from favourable international oil markets, bearing in mind that this commodity remains the main source of foreign currency income for the country as well as the main source of income for the national budget.

In this context, Table 2.4 shows that government oil revenue GOILR increased from L.D 484 million in 1970 to L.D 43566 million in 2006. As a result, government investment expenditure IGC increased from L.D 122.6 million in 1970 to L.D 11946.3 million in 2006 and the sum of government investment during the period 1970-2006 amounted L.D 91244.7 million.

Although most of these funds were injected into the non-oil sector, the contributions of this sector GNOILR to the total government revenue GYTOT were only 13.25% and 4.02% in 1970 and 2006 respectively.

36 Accordingly, it should be noted that ‘‘although Libya was instrumental in forcing up oil prices in the early 1970s, it has recently become the victim of its dependence on oil revenues’’ (Khader, 1987; 202).

The Libyan economy, as mentioned before, has been deeply influenced by the recession in the oil sector during the first and second world oil shocks, where the oil exports and revenues have shrunk because of the reduction in price and production since 1981 (Khader, 1987; 202).

From a peak of L.D 5951.1 million in 1980, Libyan oil revenues fell to L.D 2520 million in 1983 and L.D 898 million in1988 (as shown in Table 2.4). Furthermore, the share of non-oil revenue in the total government revenue reached its highest rate in 1988 and its lowest rate in 2006. These rates were 40.34% and 4.02% respectively (as it can be deduced from Table 2.4).

Thus, in less than 8 years, Libyan oil revenues have dropped by more than 84.91% (as can be deduced from Table 2.4).

For instance, and in the same manner, government oil revenues GOILR dropped dramatically from L.D 2230 million in 1992 to L.D 1267 million in 1993. Oil revenues had a negative annual growth rate in these two years and decreased from 12% in 1992 to - 43% in 1993, accompanied by a decrease in total government expenditure GYTOT from L.D 3612.2 million in 1992 to L.D 2752.9 million in 1993 (as shown in Table 2.4). The reduction in oil revenue was, in fact, more than had been expected.

Therefore, the dependence on oil revenue is not an optimal stance for macroeconomic management. The entire financing process in Libya is dependent on the oil sector, which, in turn, depends on the oscillations of the international oil market that is fraught with risks and uncertainty.

37 It is worthwhile noting that the fluctuation in oil price or in the volume of its production will have an effect, in turn, on the country’s ability to plan and to achieve its economic goals.

In addition, the inability of non-oil revenues GNOILR - which fluctuated during this period - to compensate for the decline in oil revenues GOILR in this period, has been reflected in the country’s spending abilities, in aggravated domestic public debt and in the drastic cuts in development budgets. Consequently, the public budget has achieved a deficit over the nineteen-eighties and, to the mid- nineteen-nineties, this problem was exacerbated during this period to the extent that one economists stated that ‘‘it was oil that made Libya and oil is now letting it down’’ (Burgat, 1987; 213).

Therefore, this budget deficit compelled Libya to start an austerity policy, which involved cutbacks in spending on the development budget and administrative budget. The development spending IGC decreased from L.D 2872.6 million in 1981 to L.D 702 million in 1990 and the administrative spending CGC decreased from L.D 2551.6 million in the 1981 to L.D 1997.4 million in 1990.

As shown in Table (2.4), the period from the mid-nineteen-nineties to the end of the study period shows that there is a dominant expansionist trend for all (except for the extra-budget) public budget variables. For instance, the total government expenditure GETOT increased from L.D 4989.4 million in 1995 to L.D 12467.8 million in 2002, and jumped to L.D 20841.3 million in 2006. In addition, the total government revenues GYTOT increased from L.D 4737.8 million in 1995 to L.D 9653.2 million in 2002, and jumped up to L.D 49061.5 million in 2006 (as shown in Table (2.4)); meanwhile, this can be seen - with some exceptions - from the components of these two variables.

The expansionist boom that took place in the Libyan economy during this period was due to several reasons including the end of sanctions in 1999 - which were

38 imposed on Libya by the United Nations in 1992. In addition to the oil shock that began in the global oil markets in 1994 and in ‘‘October 2004 the oil price had hit a peak of over $ 50 per barrel, at which point the oil price had more had doubled in dollar terms since the late 1990’s’’( Brook., Price, et al, 2004; 4). All these combined factors led to massive increases in oil prices and thus to oil income.