IMF国际货币组织全球-Lebanon_2019-Article-IV-Consultation_62页_1mb

Lebanon 2019 Article IV Consultation Summary

Core Content

The International Monetary Fund (IMF) conducted its 2019 Article IV consultation with Lebanon, resulting in a comprehensive assessment of the country's economic situation and policy priorities. The consultation was based on discussions held from June 18 to July 2, 2019, and the staff report was finalized on August 21, 2019. The Executive Board concluded the consultation on September 11, 2019, emphasizing the need for fiscal adjustment, structural reforms, and financial sector stabilization.

Main Points

Economic Challenges

• Growth: Lebanon's economic growth slowed to 0.3 percent in 2018 and remained weak in 2019, with most high-frequency indicators showing negative readings.
• Inflation: Inflation spiked to 6 percent in 2018, driven by high prices of imported fuel, and slowed to around 3.4 percent in 2019.
• Fiscal Deficit: The headline fiscal deficit increased to 11 percent of GDP in 2018, up from 8.6 percent in 2017. The 2019 budget targets a deficit of 7.6 percent of GDP, but staff estimates suggest it may be higher.
• Public Debt: Public debt is projected to reach 155 percent of GDP by the end of 2019, with a long-term trajectory toward 185 percent by 2024.
• Twin Deficits: Lebanon faces large domestic and external deficits, with the current account deficit exceeding 25 percent of GDP in 2018.
• Deposit Inflows: Deposit inflows slowed in 2018, reducing the authorities' ability to finance deficits. The BdL has been actively attracting USD deposits to maintain foreign reserves.

Policy Priorities

• Fiscal Adjustment: A multi-year fiscal consolidation is needed to reduce the public debt-to-GDP ratio. The primary surplus should reach 4–5 percent of GDP in the medium term.
• Structural Reforms: Reforms are essential to unlock growth potential and improve the external position. Key areas include electricity sector reform, reducing the cost of doing business, and improving governance.
• Monetary Policy: The BdL must reduce quasi-fiscal operations, strengthen its balance sheet, and require banks to build up their capital buffers.
• Donor Support: Donors should accelerate disbursement of USD 11 billion in concessional financing for the Capital Investment Plan (CIP) approved at CEDRE in April 2018.

Key Recommendations

• Fiscal Measures: Increase VAT rates, broaden the tax base, remove exemptions, and raise fuel excises. Eliminate electricity subsidies and conduct an expenditure review to identify savings.
• Structural Reforms: Implement the 2019 electricity plan, improve governance, and reduce corruption.
• Financial Sector Buffers: The BdL should reduce support to the government and banks should increase their capital buffers.
• CIP Implementation: Ensure successful execution of the CIP to counteract the contractionary effects of fiscal adjustment.

Key Information

Fiscal and Economic Indicators

• Real GDP (market prices): 0.3% in 2018, 0.2% in 2019, projected to increase to 2.3% in 2021.
• GDP Deflator: 5.3% in 2018, projected to decrease to 2.1% by 2024.
• Consumer Prices: 4.0% in 2018, projected to stabilize at 2.4% by 2024.
• Government Deficit: -11.0% in 2018, projected to reach -15.3% by 2024.
• Primary Balance: -1.4% in 2018, projected to improve to -1.2% by 2024.
• Total Government Debt: 151% of GDP in 2018, projected to rise to 185% by 2024.
• Gross Reserves: Declined to USD 36.5 billion by May 2019, down from USD 56.4 billion in 2018.

External Sector

• Exports: Projected to grow at 7.3% in 2019, with a slower pace in subsequent years.
• Imports: Projected to decrease slightly in 2019, but remain high relative to GDP.
• Balance of Goods and Services: -24.3% in 2018, projected to improve to -16.7% by 2024.
• Current Account: -25.6% in 2018, projected to improve to -23.1% by 2024.
• Foreign Direct Investment: Projected to increase from 2.4% in 2018 to 3.5% by 2024.

Financial Sector

• Deposit Dollarization: Reached 71% in 2018, with continued growth.
• Interest Rates: The three-month treasury bill yield rose from 9.0% in 2018 to 10.5% in 2019.
• Non-Performing Loans: Increased from 12.5% to 13.8% in 2018, with a sharp rise in construction loans.
• BdL Operations: The BdL has been financing the fiscal deficit through unconventional financial operations, contributing to tight monetary conditions and high interest rates.

Conclusion

The IMF highlighted the need for sustained fiscal adjustment, structural reforms, and financial sector stabilization to address Lebanon's long-standing economic challenges. The country's economic position remains fragile, with high public debt, twin deficits, and a weak external position. The successful implementation of the CIP and continued international support are crucial for economic recovery and sustainability.