Benghazi, January 27, 2026 – An economic expert warned of widespread economic and living repercussions if subsidies on fuel are lifted at the rates being discussed, without implementing parallel reforms in wages and providing social safety nets.
In a statement, the expert said that raising gasoline prices sevenfold, diesel eightfold, and cooking gas sixfold, while wages remain stagnant and with sectors operating below the minimum wage, does not constitute reform. Instead, it represents a comprehensive price shock whose effects will extend to various sectors.
The expert explained that fuel is a fundamental element in transportation, agricultural and industrial production, electricity generation, and services. This will lead to price increases being directly transferred to the prices of goods and services. High inflation rates are expected within a short period, along with a noticeable decline in citizens’ purchasing power, especially concerning basic goods.
It was noted that rising operational costs will negatively impact production, leading to a decrease in consumer demand and the closure of a number of small and medium-sized projects, particularly in the transportation, bakeries, workshops, and agricultural services sectors. This would push the economy towards a state of stagflation.
On the social front, it was confirmed that stagnant salaries against the significant rise in fuel prices will lead to the erosion of households’ real income and increased costs for transportation, food, and cooking gas. This will expand the circle of poverty and increase the living burdens on citizens.
Regarding the public budget, it was clarified that reducing the subsidy bill may achieve short-term accounting savings. However, these savings could be eroded by inflation and a decline in domestic demand, alongside an increased need for alternative support programs. A warning was issued about the expansion of the informal economy and the emergence of a black market for fuel in the absence of regulatory measures.
The economic expert stressed that any adjustment in fuel prices must be accompanied by wage reforms and the activation of social protection mechanisms. A warning was issued that price reform without simultaneous income reform would impose additional burdens on citizens and would not achieve economic stability.
In recent days, media and social media platforms have circulated news about intentions to lift subsidies on fuel to address some imbalances in the financial situation of the state.
