FACTBOX: Facts on Lebanon’s economy

 

Reuters) – The economy of Lebanon, which is set to hold a parliamentary election on June 7, has shown what the International Monetary Fund (IMF) has described as "remarkable resilience" in the face of the global credit crisis.

Following are some of the economy’s main features:

 

GROWTH

 

The economy grew by more than 8 percent in 2008 according to the International Monetary Fund (IMF), despite a first half marred by the worst bout of internal fighting since the 1975-90 civil war and the onset of the global financial crisis. Policymakers are projecting growth of 4 percent or more in 2009.

 

HEFTY PUBLIC DEBT

 

Lebanon’s public debt burden is one of the heftiest in the world at around 162 percent of gross domestic product (GDP), much of it incurred as a result of reconstruction after the 1975-90 civil war. The debt was measured at $47.21 billion in February, around 44 percent of it in foreign currency, according to the finance ministry. The government has cited progress in reducing the debt-to-GDP ratio to its current level from around 180 percent in 2006. Moody’s recently upgraded Lebanon’s sovereign ratings, citing a substantial improvement in the country’s external liquidity and the proven resistance of the public finances to shocks. The state’s deficit for 2009 is projected at around 12 percent of GDP.

 

BANKING SECTOR RESILIENT TO CRISIS The banking sector is seen as a major support of the state finances. The banks’ deposit base, which grew by 15 percent in 2008, is forecast to increase by 12 percent in 2009, the central bank governor said on May 20. Lebanon’s three biggest banks each recorded double-digit profit growth in the first quarter — results which Moody’s Senior Analyst and Vice President Tristan Cooper said bolstered the view that the local banks would remain resilient. The sector was shielded from the financial crisis by tight regulation.

 

REMITTANCES

 

Expatriate remittances account for around a fifth of Lebanon’s economy. Some economists have said transfers should fall because of the global economic slowdown, though policymakers have pointed at a balance-of-payments surplus in the first quarter as proof that the country is still enjoying a capital inflow.

 

FALLING INFLATION, STABLE INTEREST RATES

 

Year-on-year consumer price inflation dropped to 2 percent in April from double digits last year, according to central bank data. Lower fuel and commodity prices have helped reduce the rate of inflation.

 

The central bank has repeatedly stated its aim of keeping interest rates stable to preserve liquidity levels. The IMF has urged a cautious approach to interest rates to support deposit inflows and de-dollarization of bank deposits.

 

(Writing by Tom Perry; Editing by Samia Nakhoul)