It is an understatement to say that the Lebanese are preoccupied with the state of their economy. Yet during a recent visit to the country, the American Task Force for Lebanon did not find a consensus within the government on the tough actions needed to prevent the Lebanese economy from collapse.
Lebanon barely recorded a 1 percent rate of growth this past year. It has the fourth worst debt to GDP ratio in the world and is at the bottom of the rankings for infrastructure development. Its deficit is running at about $5 billion annually, which will push the debt to GDP ratio to 200% in a few years. Also, Lebanon’s credit rating is declining and this is eroding confidence in attracting foreign investment.
The Central Bank has engineered a monetary policy that many experts believe has bought the country two more years of time to enact a strong fiscal policy before the economy hits bottom. One can only hope that the government understands this and acts quickly...
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Edward M. Gabriel is a former U.S. Ambassador to Morocco and currently President of the American Task Force for Lebanon. He has an extensive background in international affairs, having convened multilateral policy forums involving national security, environmental, and trade and energy issues.