Banking to cannabis: McKinsey has plan for Lebanon economy
beirut — Global consulting firm McKinsey & Co has set out its vision for Lebanon’s economy, with recommendations ranging from building a wealth-management and investment-banking hub to becoming a provider of medicinal cannabis. Turning it into reality will be a tall order.
Caretaker Economy and Trade Minister Raed Khoury said implementing the thrust of the 1,000page report will be crucial if Lebanon, the world’s third-most indebted nation, wants the international community to start releasing $11 billion in grants and soft loans pledged in April.
“They are all interrelated,” Khoury said on Friday in an interview at his Beirut office as he read from a summary of the report.
The abridged document was presented to President Michel Aoun this week, and the full version must be ratified by the new cabinet, which Prime Minister-designate Saad Hariri is still attempting to form following May’s elections.
Lebanon hired McKinsey this year to help it formulate an economic plan. With at least three times as many Lebanese living abroad than at home, Lebanon has been sustained by remittances, mainly from the Gulf and Africa, which banks use to buy government debt.
Public debt stands at the equivalent of 150 per cent of economic output and the International Monetary Fund sees it reaching 180 per cent in five years. That puts Lebanon in the same league as Japan and Greece.
Foreign reserves — currently a record $43 billion — enabled the local currency to survive political storms that periodically left Lebanon without a president or prime minister, as well as the influx of 1.5 million Syrian refugees and the negative impact of low oil prices on the Gulf job market.
Tackling some of Lebanon’s biggest problems, including corruption, will be key to rebuilding the economy, Khoury said. Lebanon has slipped down Transparency International’s graft ranking to 143rd of 180 countries. The report proposed some “quick wins” to ease the economic slowdown and show the international community that the country is serious about change, he said. They include setting up a construction zone for prefabricated housing that can be used in the rebuilding of war-torn Syria and Iraq, boosting tourism and opening new markets for a couple of Lebanese crops: avocados — and cannabis.
Cannabis is cultivated clandestinely in the eastern Bekaa Valley despite regular government eradication campaigns. Khoury said Lebanon could legalise cultivation and export the drug for medicinal treatments. “The quality we have is one of the best in the world,” he said, adding cannabis could become a one-billion-dollar industry.