On March 14, 2018, the IMF issued a statement that highlighted medium-term projections on Lebanon’s debt to GDP ratio and economic growth as the Capital Investment Plan (CIP) is implemented. The IMF concludes that the CIP program will reap bigger rewards for the Lebanese economy, if it is accompanied by fiscal and structural reforms.
1- CIP Implementation without policy reforms: CIP v/s Baseline
As per the IMF, the Lebanese economy can only generate a limited output from the additional capital made available by the CIP due to existing inefficiencies in investment spending. Therefore, by 2022:
- The Debt/GDP ratio will rise to 176% instead of 173% under the baseline scenario
- Real GDP growth would reach an annual 3.1% as opposed to 2.9% under the baseline scenario
2- CIP Implementation with Fiscal & Structural Reforms: CIP v/s Adjustment
- The Debt/GDP would reach 150.3% if the CIP and reforms are implemented as opposed to 148.4% if only reforms are undertaken
- Real GDP growth would reach an annual 3.6% if the CIP and reforms are implemented as opposed to 3.1% if only reforms are undertaken
The Lebanese government has requested a Public Investment Management Assessment (PIMA) from the IMF – effective spring or early summer 2018. According to the IMF, the “PIMA could then be the basis for reforms in public investment management ahead of significant scaling up of public investment”.
 Baseline scenario is the scenario where all the main economic parameters evolve under a status-quo
 Adjustment scenario is the scenario where only policy reforms are implemented