Some progress in capacity rebuilding has been made, and the government’s commitment and capacity for policy planning remain adequate, as demonstrated by the successful implementation of the 2007 program and the good performance during the first half of 2008.įund support as part of a concerted international effort. 08/150).Ĭapacity for policy planning and implementation and demonstrated commitment. Manage to fully restore administrative and institutional capacity, largely because of continuing political and security issues.ġ See also April 2008 EPCA report (IMF Staff Country Report No. Introduce a floor on gasoline excises as envisaged in the program, because they considered that the implied increase in retail prices was not politically feasible at the time. Prepared audit plans for the National Social Security Fund (NSSF) and the power utility Electricite du Liban (EdL). Given the political stalemate, the auction was postponed. Succeeded in maintaining confidence in the domestic banking system and the exchange rate peg, which translated into an acceleration of deposit growth and an increase in international reserves.Īchieved a primary fiscal surplus (excluding grants) which contributed to a reduction in the debt-to-GDP ratio.Īdvanced preparations for the privatization of two mobile phone operators to near completion. The program, with an access of 25 percent of quota (SDR 50.75 million), aimed at maintaining financial stability, containing the budget deficit, and initiating structural reforms that are critical to the success of the medium-term Paris III reform program. Lebanon: The Authorities’ 2007 Program Supported by EPCA 1 In this context, it will take time to deal with the substantial legislative backlog (including passage of the budgets for 2006-08), and for the new ministers to rebuild the administrative capacity needed to implement a comprehensive economic program that could warrant upper credit tranche support from the Fund.
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The protracted political paralysis and domestic conflicts in 2007-08 have prevented the full restoration of institutional and administrative capacity, weakened by the 2006 war-key ministries were vacant, and parliament did not convene for over a year. Institutional and administrative capacity. While improved, the level of international reserves needs to be further increased to support investor confidence in the still fragile post-conflict (and pre-election) political environment. Continued balance-of-payments support is urgently needed in 2008-09 to maintain confidence in the face of a growing current account deficit, which is now projected at around 10-11 percent of GDP in 20 (partly because of delayed reconstruction spending), large foreign currency debt obligations, and the need to rollover foreign exchange deposits in the context of a volatile international financial environment.
Staff’s judgment is that Lebanon continues to meet the eligibility criteria for EPCA.īalance of payments need. Their request is based on an economic program for 20 that builds on the achievements in 2007 ( Box 1), and seeks to further reduce the government debt-to-GDP ratio, build up the international reserve buffer, and start to implement key reforms under the Paris III framework.ģ.
The authorities have requested a follow-up EPCA to continue benefiting from the macroeconomic and financial discipline provided by Fund involvement. The Doha agreement, brokered by the Qatar government, provided for the election of a president, the reconvening of parliament, and the formation of a national unity government to lead the country to the May 2009 general elections. A string of security incidents culminated in an armed domestic conflict in May 2008.
Shortly after the war, the parliamentary minority withdrew from cabinet, and parliament did not convene for over a year. The 2006 war with Israel led to political stalemate and repeated outbreaks of domestic fighting until the formation of a national unity government in July 2008.
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