Lebanon witnessed some stabilization in 2022 marked by increased tourism, robust remittances, and improved terms of trade. However, ongoing challenges especially the recent development in the Middle East and the potential spillover of the war between Hamas and Israel to Lebanon are weighing on the ambiguous economic outlook and hinges on policy actions. That said, today more than ever, the need for implementing a robust recovery plan is essential to alleviate imbalances for Lebanon and boost confidence, and to foster a return to sustainable growth. Nevertheless, final agreement with IMF has not been reached yet and maintaining the status quo poses the greatest risk for Lebanon’s stance. Limited investment in physical capital, constrained bank credit, and subdued real growth are more to see. The external position may be volatile with limited support from international partners. Public debt remains unsustainable without reforms, restricting government borrowing and services.
As the IMF’s Executive Board recently has been engaged in discussions with Lebanese officials regarding economic developments and policies, talks about a proposed solution have been conveyed – though yet still unofficial and not publicly disclosed — involving the creation of a public assets fund. This fund aims to facilitate the gradual return of bank deposits over the next two decades, according to unconfirmed reports. It’s important to note that this information has not been officially announced by the IMF or the Lebanese government, and discussions surrounding this potential resolution are currently circulating through informal channels.
In light with this suggested resolution, we will emphasize the significance of public assets and delve into a comprehensive examination of the status of state-owned enterprises in Lebanon and the implications of privatization of public held assets amid the ongoing financial crisis.
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