Statement by IMF Deputy Managing Director Nemat Shafik at the Conclusion of Her Visit to LebanonPress Release No. 12/167
May 10, 2012
Ms. Nemat Shafik, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Beirut at the end of a three-day visit to Lebanon:
“It has been a pleasure to come to Lebanon on my first visit as Deputy Managing Director of the IMF and meet with members of the government and various sectors representing the Lebanese society. I would like to thank Prime Minister Najib Mikati for his kind invitation to participate in the Arab Economic Forum, as well as the Forum organizers.
“During this visit, I have had constructive meetings with Prime Minister Mikati, Minister of Finance Mohamad Safadi, and Central Bank Governor Riad Toufic Salamé, in which we exchanged views on domestic, regional and global economic issues.
“On the sidelines of the Arab Economic Forum, I had the opportunity of meeting with other Arab dignitaries, including the Head of the Government of Tunisia, Mr. Hamadi Jebali.
“My meetings with business leaders and officials of international organizations operating in Lebanon and my discussions with students at the American University of Beirut were also valuable opportunities to exchange views on Lebanon and the region.
“The Middle East and North Africa (MENA) region is going through dramatic change. Political transition in a number of countries has brought promises of inclusive growth. But, it has also created uncertainty that weighs on investment, tourism, and overall economic activity. MENA oil importers have also to manage higher commodity prices, lower global growth, and negative economic spillovers from the euro area and from within the region. As a result, unemployment has grown and per capita income has stagnated in many countries in the region.
“Maintaining macroeconomic stability in this environment will be challenging. Some countries will need official financial support to continue on their path toward economic transformation. In 2012 and 2013, gross external and fiscal financing needs of MENA oil importers are projected at about US$90 billion and US$100 billion, respectively. Capital markets are likely to provide only part of this financing, so timely official financing will be critical.
“The IMF is committed to supporting the Arab countries in transition with financing, technical assistance, and policy advice. The Fund has recently approved a loan for Yemen under the Rapid Credit Facility, and discussions on financing several countries are ongoing. However, IMF resources have to be complemented with resources from other Arab and international donors for this support effort to be effective.
“Let me comment briefly on Lebanon, which is not among the countries that we are in discussions with over financing, but nevertheless is facing challenges. Like many other countries in the MENA region, Lebanon has been impacted by the global slowdown and regional unrest. Domestic political and regional uncertainties have had their toll on growth in the country. Though growth is expected to pick up this year, the IMF’s projection of about 3 percent is well below Lebanon’s potential.
“Therefore, the implementation of strong domestic policies is essential to instill confidence. This requires above all maintaining fiscal discipline by targeting a primary surplus, which would keep the debt-to-GDP ratio on a downward path.
“In the medium term, creating a dynamic economy that can generate jobs would help reduce unemployment and poverty levels. This requires investment and reforms in infrastructure as well as improvements in the business climate and the labor market. A medium-term fiscal strategy anchored in reducing the debt-to-GDP ratio could revive market confidence and create fiscal space through revenue and expenditures measures for higher social and capital spending.
“I would also like to express my gratitude for Lebanon hosting and financially supporting METAC, a regional center that has provided technical assistance and training services to government agencies of ten countries in the MENA region. Technical assistance is an integral part of the IMF’s work. It was a pleasure for me to participate in the meeting of the Steering Committee of METAC.
“The Steering Committee is comprised of representatives from the European Commission, the European Investment Bank, France, Kuwait, and Oman, and recipient countries that help finance METAC’s activities. The Committee reviewed the status of the center’s operations and took stock of its efforts to build capacity for effective implementation of macroeconomic policies through the Middle East. We agreed that METAC has done a very good job in building capacity over the past years. Going forward, with additional funding it could play an even more important role in promoting the region’s economic development and capacity building, which are particularly relevant at this time of transition.
“The IMF stands ready to help Lebanon in any way that serves the interests of its people, including through technical assistance.”