Country needs to implement reforms to contain budget shortfall and address debt concerns
Lebanon’s debt-to-GDP ratio could balloon to 180 per cent by 2023 if the government does not undertake reforms to narrow its fiscal deficit, which may reach 10 per cent of GDP amid the current geopolitical tensions, the IMF said.
Lebanon needs to start implementing reforms that address its funding needs and tackle its debt, currently at 150 per cent of GDP, which is exacerbated by political uncertainty, internal disagreements and the burden of hosting about 1 million Syrian refugees, which represent about a quarter of the population. Prime Minister Saad Al Hariri’s sudden resignation in November, which he rescinded later, plunged the country into political uncertainty.
“The funding environment has been affected by the political crisis of November 2017,” the Washington-based lender said in its article IV consultation report. “Without a significant reduction in the economy’s funding needs or an increase in deposit inflows (and given the global interest rate outlook), the Banque du Liban (central bank of Lebanon) will need to increase interest rates or use its sizable gross reserves to meet the funding needs of the economy.”
Reported by Dania Saadi
Source :The National
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