São Paulo – Lower capital spending, increase of telecom revenues and a holdup in the implementation of the salary scale adjustment for the public sector should allow the Lebanese economy to obtain this year a small primary surplus. The international reserves reached US$ 39 billion at the end of November and the banking system has shown to be able to adapt to the challenges. A report released this Friday (12) by the International Monetary Fund (IMF) indicates, however, that the Lebanese economy faces a lot of challenges.
The IMF’s paper was released after a staff delegation of the institution met with local authorities on December 8, 9 and it is signed by Masood Ahmed, director of the Middle East and Central Asia Department. In the visit’s conclusion report, Ahmed notes that the Lebanese Growth Domestic Product (GDP) will grow less than 2% in 2014, a rate that is insufficient to halt the growing unemployment and increasing poverty.
Lebanon is facing challenges such as the great influx of Syrian refugees and that, according to the IMF, affect the already fragile Lebanese economy, despite the international help that the country is receiving. IMF estimates that the Syrian refugees in Lebanon already account for more than one quarter of the population, which is approximately six million.
Although it compliments economic measures taken to expand international reserves and generate a primary surplus, IMF also demonstrates concern with Lebanon’s high indebtedness levels, which account to 140% of the GDP. The paper also points out the need for reforms and investments in the electric sector, curently incapable to meet the demand.
Despite these challenges, Lebanon has several opportunities to resume growth. “In my discussions (with local authorities) I noted that declining oil prices provide a unique opportunity to repeal exemptions on gasoline taxes and excises”, he said. The document also notes that Lebanon should have in 2015 its first budget in ten years, which could send a “powerful sign” to investors of the commitment with the reduction of public debt, and also save space for the implementation of social programs and infrastructure investments.
*Translated by Sérgio Kakitani
