Analysis of the Relationship between State Budget and Trade Balance of Libyan Economy (Period: 2000 – 2008)

Abstract

The subject of the relationship between state budget and trade balance is important as economic subject, not only at the level of developing countries, but also at of advanced ones, too. Such importance emerged clearly when 1980s witnessed in United States of America a deficit in both state budget and trade balance, which was called at that time as the twin or dual deficit. We can say that the analysis of relationship between state budget and trade balance states the extent of mutual effect between financial and trade policies of any economy, namely; any change in the outcome of either one may affect the other in the same degree. To put in other words, the instruments of financial policy represented by total incomes and total expenditures can affect the trade balance through the movement of exports and imports and vice-versa. One tracing properties and features of Libyan economy may remark its dependence greatly on the public sector in financing developmental projects and making development generally, as well as its dependence on incomes to supply consumer and investment goods. Further, it depends in collecting its incomes of foreign currency on exports of chief source which is crude oil. So, study and analysis of relationship between state budget and trade balance of Libyan economy means to study and analyze relationship of public sector through the state budget, with the external sector expressed as the external trade through trade balance. The paper was processed within the framework of the Research Project of MSM 6046070906 "The economics of Czech agricultural resources and their effective use within the framework of multifunctional agri-food systems".