São Paulo – Lebanon is not in bad financial conditions when compared to other countries of the Middle East, but has challenges in its route. This was the message of the deputy director at the International Monetary Fund (IMF), Nemat Shafik, after a three day working visit in the country, last week, in which she met with local authorities. According to the executive, there are oil importing nations in the Middle East and North Africa that are negotiating loans with the institution. “Lebanon is not among the countries with which we are discussing loans, but it still faces challenges,” she said.
Shafik observed that Lebanon has been affected by the global crisis and by the regional turbulences. Furthermore, local political instability had an impact on the country’s growth. The executive said that the 3% growth forecasted for Lebanon by the IMF this year is below the country’s potential.
"Implementation of strong domestic policies is essential to instil confidence. This requires above all maintaining fiscal discipline by targeting a primary surplus, which would keep the debt-to-GDP ratio on a downward path,” said Shafik.
However, the IMF executive said that Lebanon must develop medium-term projects to strengthen its economy. "Creating a dynamic economy that can generate jobs would help reduce unemployment and poverty levels. This requires investment and reforms in infrastructure as well as improvements in the business climate and the labour market,” she said.
Shafik added that the region is living dramatic changes that bring uncertainty and reduce investment, tourism and economic activity. She said that the situation is more delicate for the oil-importer countries in the region, which are more susceptible to high commodity prices and which are suffering with the global crisis. The result is greater unemployment and lower income.
She said that oil importers need financing of US$ 90 billion in 2012 and US$ 100 billion in 2013. She also said that the capital markets may only provide part of these needs.
*Translated by Mark Ament
