## Press Release: Statement at the Conclusion of the IMF's 2010 Article IV Consultation Mission to Lebanon

_IMF News, June 8, 2010_

## Source details

**Canonical URL:** [Press Release: Statement at the Conclusion of the IMF's 2010 Article IV Consultation Mission to Lebanon](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10231)

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## Bibliographic details
- Published: June 8, 2010

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### Economic performance and outlook
- The mission visited Beirut from May 27 to June 8 to conduct the annual Article IV consultation discussions.
- "The economy has continued to perform remarkably well, notwithstanding the challenging global environment."
- Strong momentum carried over into 2010: "real GDP growth could exceed 8 percent this year if current trends continue."
- Recommendation: "managing cautiously the buoyant economy to avoid potential overheating risks."

### Fiscal position, fiscal policy, and public debt
- "High growth and rising primary surpluses have led to a drop by 30 percentage points in the government’s debt-to-GDP ratio from its peak of 180 percent in 2006."
- At end-2009: "At 148 percent of GDP ... the government’s debt is still among the highest in the world."
- Short-term fiscal guidance:
  - "In the short term, however, there is little need for a fiscal impulse this year given the buoyant economy."
  - "Therefore, budget execution should aim at a higher-than-budgeted primary surplus in 2010."
- Medium-term fiscal framework:
  - Should "provide room for more public investment and social spending, and substantially higher primary surpluses to decisively reduce the public debt-to-GDP ratio."
  - Fiscal space could be created through "a combination of measures to increase the quality of public spending and mobilizing additional revenues."

### Structural reforms and public investment
- "Plans to increase public investment, together with the implementation of sectoral reforms, are welcome."
- Emphasis on seizing positive momentum to "implement a range of pending reforms."
- Caution that "complacency should be avoided and a consensus built to quickly address Lebanon’s structural weaknesses and vulnerabilities."

### Electricity sector and state-owned enterprise reform
- "Reducing the deficit of Electricity du Liban is particularly urgent."
- Recommended measures for Electricity du Liban:
  - "adjusting tariffs,"
  - "reducing technical and non-technical losses," and
  - "improving governance."

### Revenue measures and tax policy options
- Suggested elements of a tax package:
  - "introducing the global income tax,"
  - "taxing capital gains,"
  - "broadening the VAT base by reducing exemptions/refunds," and
  - "considering gradual moderate increases in VAT and corporate income tax rates, which are relatively low by international standards."

### Monetary policy and reserve management
- "The recent focus of monetary policy has rightly been on moderating the pace of deposit inflows by lowering policy rates, given that foreign exchange reserves have now reached a comfortable level."
- Recommendation: "To ensure a smooth adjustment of the deposit inflow, a cautious approach to further policy interest rate reductions seems warranted."

### Banking system, supervision, and financial stability
- Assessment: "Lebanon’s banking system has weathered recent regional and global crises well."
- Supervisory priorities:
  - "Bank supervision should continue to focus on preventing excessive risk-taking in the context of a buoyant economy."
  - "The ongoing regional expansion of Lebanese banks also justifies a heightened focus on effective cross-border supervision."

### Real estate and macroprudential considerations
- "The recent rise in real estate prices requires vigilance."
- If credit growth accelerates further: "the authorities should consider capping and gradually phasing out incentive schemes that provide exemptions to reserve requirements."

### Public-private partnerships (PPPs)
- PPPs are "a potentially useful way to address infrastructure bottlenecks."
- Caveat: "a sound institutional framework, with strong involvement of the fiscal authorities, must be put in place to avoid possible fiscal risks."

### Statistics and capacity building
- "Finally, to support effective policymaking, continued efforts are needed to improve the statistical system, including its coverage, quality, and timeliness."

*Press Release No. 10/231, June 8, 2010.*

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## References

- [Lebanon and the IMF](http://www.imf.org/external/country/LBN/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10231_