Lebanon economy expected to shrink

Lebanon's economy is expected to shrink by five per cent this year, an International Monetary Fund official said.

    IMF forcasts a 15 per cent drop in GDP for Lebanon next year

    The recent conflict between Israel and Hezbollah was one of the main reasons for the decline, Mohsin Khan, IMF regional director for the Middle East and Central Asia, said on Monday.

    The IMF had believed the Lebanese economy was on track to grow five per cent at the end of the first half of 2006, before the conflict erupted.

    The IMF estimates that Lebanon suffered about $3.5 billion in damage caused by Israel bombardment and the forced sea and air blockade.

    "We underestimated the impact of the blockade," said Khan in Dubai.

    "It had a far more serious impact than we thought. The bulk of Lebanon's revenues come from customs and 90 per cent of that comes from the Beirut port and the airport."

    Donations

    International donors pledged more than $940 million after the conflict ended in August for Lebanon's immediate relief efforts, and Khan said another donor conference would be held in Beirut in December 2006.

    He said the IMF was assessing Lebanon's needs but it was too early to estimate the size of any donor package.

    "Given Lebanon's level of debt we would recommend that most financing come from grants," he said, "Lebanon cannot take any more debt."

    Lebanon's public debt is equal to 175 per cent of gross domestic product, and Khan told said that the country' public finances were in need of urgent reforms.

    An IMF report published on Sunday estimates Lebanon's 2006 budget deficit will rise to 13.8 per cent from last year's eight per cent.

    Next year the IMF projects a deficit of more than 15 per cent of GDP.

    Lebanon's economy grew by one per cent in 2005.

    Nearly 1,200 people in Lebanon, mainly civilians, and 157 Israelis, mostly soldiers, were killed during the conflict.

    SOURCE: Reuters


    YOU MIGHT ALSO LIKE

    'We scoured for days without sleeping, just clothes on our backs'

    'We scoured for days without sleeping, just clothes on our backs'

    The Philippines’ Typhoon Haiyan was the strongest storm ever to make landfall. Five years on, we revisit this story.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    Daughters of al-Shabab

    Daughters of al-Shabab

    What draws Kenyan women to join al-Shabab and what challenges are they facing when they return to their communities?