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Lebanon has 0 pct growth in 2019, but economy prospects to improve: Salameh

Central Bank Gov. Riad Salameh during a Euromoney conference at the Four Seasons Hotel in Beirut, June 25, 2019. (The Daily Star/Mohamad Azakir)

BEIRUT: Central Bank Gov. Riad Salameh Tuesday revealed that Lebanon’s GDP achieved zero percent growth so far in 2019, but said there were still prospects for economic growth.

Speaking at a Euromoney conference at the Four Seasons Hotel in Beirut, the governor said he expected the economy to perform better at the end of 2019.

Salameh also reiterated that Lebanon will have no problem in settling all the maturing Eurobonds on time.

Nassib Ghobril, the chief economist at Beirut-based Byblos Bank SAL, told The Daily Star Tuesday that $500 million in Eurobonds matured in April, $650 million matured in May and $1.6 billion will mature in November.

Lebanon has never defaulted in the payment of its debts, even when the country experienced political paralysis and shrinking economic activity.

Salameh stressed that capital inflow to Lebanon did not stop, estimating the inflow at $500 million a month.

Lebanon counts on remittances from the Arab Gulf states mainly to reduce the balance of payments and secure funds to finance imports, estimated at $20 billion a year.

He noted that the budget deficit in the first four months of this year did not go beyond $1 billion and that he considered this amount reasonable.

The budget deficit officially stood at 11.1 percent of GDP in 2018 compared to 9.28 percent in 2017, the Finance Ministry said, finally releasing the overdue results Monday.

It is not clear why it took the ministry so long to publish last year’s financial results.

Most economists had expected the deficit to climb to more than 11 percent for 2018.

Salameh said that he has been holding talks with Finance Minister Ali Hassan Khalil to discuss a way to issue low interest treasury bills.

The World Bank, the International Monetary Fund and international rating agencies have expressed deep concern over the alarming and unabated rise of the deficit, warning that Lebanon can no longer ignore the problem.

Parliament’s Finance and Budget Committee is currently reviewing the draft 2019 state budget after Cabinet approved the document following 20 sessions of negotiations.

Cabinet’s draft managed to lower the deficit to 7.59 percent of GDP, although that number is expected to change as the committee has endorsed a series of provisions to generate revenues while also striking down a number of the proposed austerity measures. Committee head MP Ibrahim Kanaan said Monday that the committee was trying to make up for every revenue-generating measure that it rejects during the budget discussions.

The international community pledged over $11 billion in grants and soft loans during the CEDRE conference in Paris last year. The unlocking of the funds is conditional upon Lebanon’s implementation of a series of key fiscal reforms.

 
This article was amended on Friday, June 28 2019

A previous version of this article stated that the deficit-to-GDP ratio of 2018 was 11.71 percent when it was in fact 11.1 percent. The Daily Star regrets this error.

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