TRIPOLI, Jan 21: The Libyan government plans to lay off 400,000 people, or more than a third of its workforce, to try to ease budget pressures and stimulate the private sector, Prime Minister al-Baghdadi Ali Al-Mahmoudi said.

Mahmoudi told the General Peoples Congress or parliament on Saturday the number of civil servants and state employees had grown excessively to more than one million in recent years and their salaries ate up 4 billion dinars ($3.13 billion) in 2006.

Outlining a 31 billion dinar draft budget for 2007 at the assembly in the town of Sirte, Mahmoudi said those who lost their jobs would receive assistance.

“Each released public employee will be given his full salary for three years or will be granted up to 50,000 dinars in loans for each one who wants to start his own business,” he said in a speech broadcast on national television.

“The objectives of this budget are to increase Libyans' standard of living by the rate of 5 per cent during this year and to promote productive activities,” he said without elaborating.—Reuters