The Role of the Ministry of Economy in Controlling Consumer Goods Prices Amidst Exchange Rate Fluctuations in Libya

Abstract

This research paper addresses the issue of the continuous rise and fluctuation of consumer goods prices in Libya, and the resulting direct impacts on citizens' purchasing power and standard of living. The study focuses on the effectiveness of the Ministry of Economy's interventions in controlling prices and managing the effects of exchange rate volatility. The study employs a descriptive-analytical approach, utilizing a questionnaire distributed to a sample of 70 consumers. Data analysis was conducted using SPSS software, applying various statistical methods such as Cronbach’s alpha, Pearson correlation coefficient, the t-test, and simple linear regression. The study covers the theoretical framework of economic policies—including their objectives and instruments—as well as the Ministry of Economy's role in policy formulation, market monitoring, and coordination with other government bodies. It also discusses the types and causes of exchange rate volatility—including economic, political, and monetary factors, global crises, and market expectations—alongside proposed mechanisms to mitigate the impact of such fluctuations. Analysis regarding the Ministry of Economy's role in controlling consumer goods prices revealed that most arithmetic means fell below the hypothetical mean of the five-point scale. The researcher interprets this as an indication of the Ministry's weak role in price control, as well as deficiencies in responding to market changes and a lack of transparency regarding decisions and measures taken. Furthermore, findings concerning exchange rate volatility indicate that such fluctuations impact consumer goods prices, purchasing power, and the cost of imports, while current measures appear insufficient to mitigate these effects. Simple linear regression analysis revealed a correlation coefficient of 0.182, indicating a very weak relationship between Ministry of Economy interventions and consumer goods prices. The coefficient of determination (R²) was 0.115, and the significance level was 0.10. The study concluded that the Ministry's interventions explain only a limited proportion of the variation in commodity prices and that the policies implemented failed to achieve sufficient price stability amidst exchange rate fluctuations. Key Findings 1. Weak impact of Ministry of Economy policies and interventions on controlling consumer goods prices. 2. Direct impact of exchange rate fluctuations on import costs and, consequently, on domestic prices. 3. Low level of transparency regarding price-related decisions. 4. Limited effectiveness of the Ministry in taking decisive measures to regulate prices. 5. Need for greater coordination between economic policies and relevant stakeholders. Key Recommendations 1. Establish a periodic system for monitoring consumer goods prices. 2. Develop mechanisms for rapid intervention in cases of unjustified price hikes. 3. Publish clear data regarding prices and the reasons for their fluctuations. 4. Enhance coordination between fiscal and monetary policies to mitigate the impact of exchange rate fluctuations. 5. Diversify import sources to reduce reliance on a single market. Conclusion The paper concludes that exchange rate fluctuations are a significant factor driving up consumer goods prices in Libya, whereas the interventions of the Ministry of Economy—based on the study sample results—have had a limited impact on achieving price stability. The study underscores the need to develop oversight and intervention mechanisms, as well as to enhance transparency and coordination among economic institutions.