Blom Bank: Lebanon can rebalance the economy

Blom Bank, Lebanon’s largest lender by assets, believes the government will be able to usher in the required measures that will allow it to implement the structural reforms required to address weakness and rebalance the economy, its chairman said. Lebanon has the third-highest debt to gross domestic product ratio at 150 per cent, which is projected to increase to 155 by the end of this year. The country is struggling to control its finances as a result of ballooning debt that reached $86.3 billion (Dh317bn) at the end of August owing to anaemic growth and the strain of hosting more than a million Syrian refugees.

The economy only grew 0.3 per cent last year and is projected to slow to 0.2 per cent this year, according to the International Monetary Fund.

“Although we are going through a tough period, serious economic reforms will be ultimately implemented in areas relating to fiscal sustainabilities, governance, public enterprises and quality of investment climate,” Saad Azhari told The National at the annual World Bank IMF meetings in Washington.

At the Cedre international donor conference in Paris last year, the country received pledges of $11bn, which are aimed at financing infrastructure projects.

To unlock the funds, however, the government needs

Lebanon has the third-highest debt to gross domestic product ratio at 150%, and it is likely to reach 155%

to implement reforms, which include lowering the fiscal deficit by 1 percentage point annually over five years.

Despite the challenges Mr Azhari is upbeat.

“Coupled with the promised funds from the Cedre conference and the potential for oil and gas exploration that will start end of November beginning December, the Lebanese economy can turn around and follow a steady growth path,” he said.

“What is needed is a solid political will and consensus on reforms and a thorough understanding on the part of the public on the urgency of reforms,” Mr Azhari said.

Lebanon’s fractious system has also impeded progress. Political parties and their representatives dominate all major decisions related to the economy, often in the context of a quid pro quo.

Charbel Nahas, a former telecoms minister once allied with President Michael Aoun, tweeted: “Those in power are not at the level of responsibility”.