The International Monetary Fund (IMF) announced that the Lebanese economy has shown resilience despite the burden of Syrian refugees escaping the war in their country. Yet, IMF warned Lebanon that it should control the sovereign debts.
Chris Jarvis, an IMF official who led the Washington-based lender’s visit to Beirut this week, stated that the Lebanese economy is known for its resiliency and has succeeded several times in overcoming shocks.
He added that Syrian refugees represent now quarter the Lebanese population and they cause a pressing need to put the economy on a sustainable track and to stop the increase in public debt. “Lebanon’s economic conditions remain challenging and regional spillovers continue to dominate the near-term outlook,” said Jarvis.
“Lebanon has made political progress in recent months with the new electoral law ratified in parliament, paving the way for the first parliamentary elections in eight years. Despite these developments, we expect real growth to remain subdued in 2017,” added the IMF.
Jarvis and the accompanying delegation visited Beirut in Sept. 7-13 to showcase economic and financial developments in Lebanon, to evaluate economic dimensions and to discuss the policies’ priorities.
At the conclusion of the meeting, he said: “My team and I had the privilege of meeting with President Michel Aoun, Prime Minister Saad Hariri, Central Bank Governor Riad Salame, Director General of Finance Alain Bifani, Minister of State for Displaced Affairs Mouein Merehbi, and Minister of State for Combating Corruption Nicolas Tueni.”
“Lebanon’s economy is known for its resilience, and it has repeatedly managed to weather significant shocks. To preserve confidence there is an urgent need to place the economy on a sustainable path and halt the rise in public debt. Front-loaded fiscal adjustment is needed based on revenue measures, increasing tax compliance, increasing fuel taxation, and re-balanced spending, including by reducing costly electricity transfers,” he added.
“The authorities can also promote sustainable growth through structural reforms, including by taking steps to improve the business climate. There is a need to improve the institutional framework before undertaking large investment projects and to assess the risks and potential fiscal costs arising from any Public-Private Partnership projects. Passing a budget—the first in more than a decade—with reliable fiscal adjustment measures would send a strong signal of commitment to reduce public debt and will boost confidence.”​ ​