By Ulf Laessing
TOBRUK Libya (Reuters) - Libya's budget deficit could more than double to 19 billion Libyan dinars ($15 billion) this year, as political and civil chaos ravage the OPEC member's oil revenues, a senior lawmaker said on Wednesday.
Libya usually enjoys large budget surpluses thanks to oil export revenue but last year it ran an 8 billion-dinar deficit as a wave of protests cut into crude output. That civil strife has since spiraled into fighting that is close to civil war.
In response to the economic crisis, the House of Representative plans to cut spending in the 2014 budget next week to 52 billion dinars from 64 billion dinars, Abdelsalam Ansiya, a senior lawmaker expected to be the new head of the budget committee, told Reuters.
Parliament will also slash its oil revenue forecast to 17 billion dinars from a previous estimate of 26 billion, he said.
"In the first six months there were almost no oil revenues," said Ansiya, who was the previous budget committee head before June elections for a new parliament.
Oil production has increased to 800,000 barrels per day (bpd) but two months ago output was less than a quarter of that due to year-long protests at ports and technical problems at facilities that had stood idle.
For months Libya's oil production was less than 100,000 bpd, barely enough to supply its own Zawiya refinery.
Ansiya said the budget deficit estimate of 19 billion dinars - up from a previous estimate of 10 billion - was on the pessimistic side.
"I personally think the deficit will be less," he said.
SALARIES AND SUBSIDIES
The government is unable to control brigades of former rebels who helped oust Muammar Gaddafi that are now battling each other.
Chaos reached the capital Tripoli in late July and after weeks of fighting an armed opposition group from the city of Misrata took control, forcing parliament to move to the eastern city of Tobruk.
Expatriates have pulled out, diplomats have evacuated and foreign airlines have mostly stopped flying to Libya.
The Tobruk parliament is being challenged by a rival assembly and government, set up by the Misrata group controlling Tripoli. But Ansiya said the House of Representatives was still able to cooperate with the central bank in Tripoli.
"The central bank is (still) paying salaries and subsidies," he said.
The slump in oil revenues forced the central bank to eat into its foreign currency reserves, which were down to $109 billion by the end of June, the last reported figure, from $130 billion in August 2013.
The bank might have to draw on more funds as Libya has yet to finalize legislation governing bond issues, a plan long in the works and hard to achieve due to the turmoil, analysts say.
Ansiya said parliament would not cut the public sector salaries and subsidies that make up more than half of the budget and would instead target ministerial and infrastructure spending since the militia fighting has made many projects impossible.
That might help the budget, but may also fuel discontent among Libyans. Anger over ageing schools and poor roads were among the grievances of Libyans who rose up against Gaddafi.
Major projects such as a new airport for Tripoli have already been halted by chaos and political infighting.
A huge repair bill from the Tripoli fighting is also waiting. The old airport terminal, the runway and much of the civilian air fleet were damaged during the fighting in Tripoli in July and August.
(Editing by Robin Pomeroy)