“The reform agenda is known, but is now more urgent” notes the IMF staff in their 2016 Article IV Consultation for Lebanon. Indeed, a lot of ink has been poured on the needed reforms in Lebanon: Fiscal imbalances must be repaired, public debt should be set on a downward path and the electricity sector needs to be more efficient. However, the novelty this time is the urgency with which these issues need to be addressed. The recent election of a president after two years and a half of deadlock is a positive and much-needed breakthrough in order for policy changes and structural reforms to be carried.
The longer the imbalances remain unrepaired, the deeper the damage they would inflict. According to the IMF report, the “adjustment needed to stabilize Lebanon’s debt dynamics has increased” due to low growth and a heavier debt burden. The IMF estimates the real economic growth rate at 1% in 2015 and projects the same growth rate for 2016. The fund’s figures indicate that real growth will remain below the 4% potential until at least 2018.
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