{
  "title": "Lebanon: Staff Report for the 2014 Article IV Consultation",
  "publication": "IMF Staff Country Reports, July 31, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2016/12/31/lebanon-staff-report-for-the-2014-article-iv-consultation-41801",
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  "summary": "KEY ISSUES Context: The economy is being severely tested by the Syria crisis. The refugee influx has reached one quarter of the population, fueling already high unemployment and poverty.",
  "sections": [
    {
      "heading": "Context and macroeconomic environment",
      "content": "- The economy is being severely tested by the Syria crisis.\n- The refugee influx has reached one quarter of the population, fueling already high unemployment and poverty.\n- Political impasse from the presidential elections—following months of negotiations over a new government—adds to uncertainty.\n- The economy is suffering from a broad-based deterioration, with subdued growth and widening fiscal imbalances.\n- Public debt is on the rise.\n- Progress on structural reforms has been limited.\n- Positive factors: deposit inflows have held up; foreign exchange reserves are sizeable; security conditions have significantly improved, lifting tourism prospects."
    },
    {
      "heading": "Key challenges",
      "content": "- Urgent need for fiscal adjustment to achieve a sustainable debt reduction.\n- Need for structural reforms to boost growth and address social inequities.\n- Lebanon cannot shoulder the costs of the massive inflow of Syrian refugees alone; international budget support is needed."
    },
    {
      "heading": "Major findings and risks",
      "content": "- Fiscal deterioration is widening and public debt is increasing.\n- Labor market pressures and limited progress on reforms are weighing on competitiveness and potential growth.\n- High foreign exchange reserves and continued deposit inflows provide a buffer and signal of resilience.\n- The refugee crisis materially strains public finances and social conditions."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Fiscal policy\n  - Immediate priority: stop the fiscal deterioration and return to primary surpluses to avoid a possible loss of market confidence and put debt on a sustainable path.\n  - Consolidation strategy should:\n    - Minimize the impact of a planned salary increase for the public sector.\n    - Include broad-based and non-distortionary revenue measures.\n    - Rebalance expenditure away from electricity transfers toward capital and social spending, to promote inclusive growth.\n  - Passing a budget for 2014 would help anchor confidence.\n  - Strengthen fiscal management and anchor it in a medium-term perspective.\n- Monetary policy\n  - The Banque du Liban (BdL) should continue to maintain high foreign exchange reserves as a buffer and signal of commitment to macro-financial stability.\n  - BdL should gradually withdraw from T-bill auctions, and adopt a strategy to improve its balance sheet over time.\n- Financial sector\n  - Strengthen capital buffers.\n  - Enhance loan classification and restructuring rules.\n  - Further enhance the AML/CFT regime.\n- Structural reforms\n  - Reforms in the electricity sector and the labor market are imperative to:\n    - Address current competitiveness pressures.\n    - Lay the foundations for higher-productivity growth.\n    - Improve social conditions.\n- Refugee crisis response\n  - International budget support is needed to help absorb the costs of the Syrian refugee inflow.\n  - Strong government commitment to adjustment and reforms—along with a concerted policy framework to deal with the refugee crisis—would bolster credibility and help mobilize support."
    },
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      "heading": "Publication metadata (selected)",
      "content": "- Publication date: July 31, 2014\n- Pages: 72\n- Series: Country Report No. 2014/237\n- DOI: https://doi.org/10.5089/9781484368282.002\n\nLebanon: Staff Report for the 2014 Article IV Consultation, International Monetary Fund.\n\n---\n\n Content in this bundle\n\n- Cr14237\n  - Cr14237 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Cr14237 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: July 31, 2014",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781484368282.002",
    "The economy is being severely tested by the Syria crisis.",
    "The refugee influx has reached one quarter of the population, fueling already high unemployment and poverty.",
    "Political impasse from the presidential elections—following months of negotiations over a new government—adds to uncertainty.",
    "The economy is suffering from a broad-based deterioration, with subdued growth and widening fiscal imbalances.",
    "Progress on structural reforms has been limited.",
    "Positive factors: deposit inflows have held up; foreign exchange reserves are sizeable; security conditions have significantly improved, lifting tourism prospects.",
    "Urgent need for fiscal adjustment to achieve a sustainable debt reduction.",
    "Need for structural reforms to boost growth and address social inequities.",
    "Lebanon cannot shoulder the costs of the massive inflow of Syrian refugees alone; international budget support is needed.",
    "Fiscal deterioration is widening and public debt is increasing.",
    "Labor market pressures and limited progress on reforms are weighing on competitiveness and potential growth.",
    "High foreign exchange reserves and continued deposit inflows provide a buffer and signal of resilience.",
    "The refugee crisis materially strains public finances and social conditions.",
    "Fiscal policy",
    "Monetary policy",
    "Financial sector",
    "Structural reforms",
    "Refugee crisis response",
    "Publication date: July 31, 2014",
    "Pages: 72",
    "Series: Country Report No. 2014/237",
    "DOI: https://doi.org/10.5089/9781484368282.002",
    "**Cr14237**"
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