Abstract
This paper attempts to draw a role for the effort to abolish subsidies or to the simplest alternative cash transfer, instead of reducing fuel and basic goods prices through subsidies. The results have showed that although there were few positive elements as a result of the implementation of subsidy program, the negative impacts of this program on Libyan economy were more. The results have also showed that the government capable of effectively implementing a range of economic policies can find less costly alternatives to fuel subsidies to meet its stated social welfare goals. However, the results have noted that a thorough political economic analysis would be needed to more completely understand the political and economic constraints in implementing subsidy reform. Therefore, the government should consider reforms, systematic data collection and rigorous analysis can help estimate the magnitude of these costs, and the most effective strategies for implementing reform and for sustaining reforms.