Country Report Lebanon October 2017

Country Report Lebanon October 2017

  • October 2017 •
  • Report ID: 359700 •
  • Format: PDF

Outlook for 2018-22



  • The political climate will remain highly fractious. The coalition government includes bitter rivals, leading to stalemate and division, impairing policymaking and reinforcing sectarian divides.
  • Political stability will not improve after a long-awaited parliamentary election is finally held in May 2018, with any future coalition taking a prolonged period to form and certain to be split along confessional lines.
  • We expect the civil war in Syria to become less intense but to continue; Lebanon will still face security challenges from jihadi groups.
  • Lebanon's Gulf allies will remain concerned about the growing influence of Hizbullah, but we expect Gulf support for Lebanon to recover gradually.
  • The fiscal deficit will remain large, and reduced assistance from the Gulf countries in the early part of the forecast period will complicate financial management. Debt-service costs will remain high but will be met.
  • An easing of Syria's war will have a mildly positive effect on Lebanon's economic growth, with real GDP expanding by an average of 3.3% in 2018-22 owing to improved trade and investment conditions.
  • A more contained conflict in Syria will support a gradual improvement in Lebanon's export performance. Nevertheless, the trade deficit will remain large as the burden of the much larger import bill continues to grow.


Review



  • The US ambassador to the UN, Nikki Haley, has criticised the reappointment of Major-General Michael Beary as head of UN Interim Force in Lebanon (UNIFIL) amid concerns he has not put sufficient pressure on Hizbullah.
  • In September the president, Michel Aoun, visited France on a state visit. The French president, Emmanuel Macron, promised to organise conferences on donor support and military aid to Lebanon and Syrian refugee policy.
  • We expect an amended tax package, aimed at funding the long-delayed public-sector wage increases agreed earlier in the year, to be approved and to come into effect by 2018.
  • Parliament has ratified the Public-Private Partnership Law, setting the stage for private-sector participation in public infrastructure projects.
  • Banque du Liban (the central bank) is planning to implement a US$1.2bn stimulus package, with the aim of boosting GDP growth that year to 3.5%.
  • The deadline for closing Lebanon's debut oil and gas bidding round was extended from September 15th to October 12th to allow parliament to vote on a new petroleum tax law on September 19th.


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