A man uses a currency counting machine to count Libyan dinar at a currency exchange office in central Tripoli March 30, 2014. (REUTERS/Ismail Zitouny)
The Libyan tragedy
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Libya is burning through central bank reserves and scrapping infrastructure projects to overcome its worst budget crisis in decades after the seizure of oil installations by armed groups has reduced the government's income almost to zero.Oil exports – Libya's lifeline – fell to less than 100,000 barrels a day last week after militiamen shut down two large oil fields, compounding closures of ports in the east by rebel groups campaigning for regional autonomy.Libya accumulated more than $130 billion in foreign reserves during times of high oil prices.To keep the state running, the central bank has granted a $2 billion emergency loan.Diplomats expect the central bank to dip further into its foreign reserves because slashing the $53 billion budget is not an option for a weak government ill-equipped to take tough measures.Libya had last year ran a budget deficit of around 6 billion Libyan dinars, he said.While the government badly needs to cut spending, the budget is actually set to rise this year.
The Libyan tragedy
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