Social - Seminars - Exhibitions - Delegations - Other

Activities
Lebanon and the IMF - 2009
May 15, 2010

Mr. Edward Gardner, Senior Resident Representative of the IMF in Lebanon, gave LDBA members and their invitees a very interesting presentation on “Lebanon and the IMF”, in a Seminar/cocktail at the Phoenicia Intercontinental Hotel.
Mr. Gardner talked about the international financial crisis, and why he believes Lebanon has been, (and will be), spared from the worst of it, to a large extent.
He also talked about the IMF activities in Lebanon.
The IMF’s role in Lebanon, he said, as in many other countries, has been a two fold role: one, as a lender, and two, as a monitoring agency, following up program implementation under Paris III, which envisioned a gradual reduction of the debt through tight fiscal policies.
Mr. Gardner further remarked that the repeated financial shocks buffeting Lebanon would have triggered financial crises in other economies with similar vulnerabilities. The resilience of Lebanon’s financial system to the large financial shocks witnessed in 2005 and again in 2006 clearly suggested that Lebanon stood apart from other emerging markets. This gave confidence that the Paris III strategy, which envisioned a gradual reduction of the debt through tight fiscal policies, had a better chance of success than an upfront debt restructuring operation.
Going back to 2007, donors endorsed the authorities’ approach and its economic reform and adjustment strategy at the Paris III conference of January 2007, and pledged $7.6 billion in financial support. Unlike the case of the Paris II conference, donors decided this time to phase their financial assistance over several years by tying it to implementation of the five-year reform program. Of the $7.6 billion, about $5 billion was actually pledged to the government, the rest being allocated to private sector support and NGOs. In turn, less than half of the government’s share was actually pledged to budget support, the rest taking the form of project assistance.
Relative to the objectives set out in early 2007—to keep the debt ratio from rising further and to preserve macroeconomic stability—the program was very successful. All of the program’s macroeconomic objectives were realized. Despite continued political uncertainty and significant shortfalls in donor disbursements, confidence strengthened more rapidly than expected and real GDP growth and money growth ended up much stronger than anticipated. The main financial impact of the continued political uncertainty was, however, felt at the level of interest rates, which remained relatively high.
Editor’s Note: In the tense political atmosphere subsequent to the May 7 events of last year, and prior to the upcoming Parliamentary Elections of June 2009, mention of Paris III and the $7.6 billion financial support it pledged has faded from circulation. The big question is, however, what will happen to Paris III in case the election results went one way or the other?

Copyright © 2012 LDBA. All rights reserved. Designed and developed by Fusion Second
Close Button
right blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blueright blue