Lebanon overview
In Lebanon we focus on:
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Supporting private sector competitiveness by improving the environment for private sector development and increasing the scope of available financial instruments
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Promoting sustainable energy supply, fostering energy sector reforms and enhancing energy efficiency
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Enhancing the quality and efficiency of public service delivery and supporting private sector participation in public infrastructure
Business opportunities for the Bank in Lebanon will depend on political initiatives and reforms pursued by the country as well as on regional geopolitics.
Initially, the Bank’s focus will be on financial institutions and the corporate sector, particularly Small and Medium-Sized Enterprises.
The Bank will also engage in extensive policy dialogue with the authorities in cooperation with other international financial institutions to foster reforms in the infrastructure and energy sectors to encourage the private sector participation, pave the way to substantial future investments and to develop the business environment.
Lebanon became a shareholder of the EBRD on 14 July 2017 and a EBRD Country of Operations on 4 September 2017.
Lebanon's policy response to the coronavirus crisis
The EBRD is monitoring Lebanon's policy response to the coronavirus pandemic. Our biweekly publication identifies the major channels of disruption as well as selected impact and response indicators.
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Current EBRD forecast for Lebanon’s Real GDP Growth in 2020 -22.0%
Current EBRD forecast for Lebanon’s Real GDP Growth in 2021 -1.0%
In the past year, Lebanon slid into a full-blown economic crisis, with signs of stagflation. The economy is estimated to have suffered a recession of 6.7 per cent in 2019, reflecting regional and domestic political uncertainties, social unrest, slow implementation of structural reforms and lower capital inflows. Lower inflows of capital resulted in a slowdown in private investment and consumption and a contraction in trade and construction, traditionally the main drivers of growth. The lira continued to depreciate, with the official pegged exchange rate (of LBP 1507.5 per US dollars) only being used for vital imports, while the rest of the economy is subject to multiple exchange rates in the parallel market, at a 60 per cent discount to the official rate.
Inflation has continued to spiral upwards, reaching 112 per cent year-on-year in July 2020, against the backdrop of the lira depreciation in the parallel market compounded by Lebanon’s high import dependence. As a result, purchasing power has been quickly evaporating, and unemployment and poverty have been rising steeply. The outlook remains uncertain.
A further deep contraction of 22.0 per cent is expected in 2020 as the result of the ongoing economic crises, the default on debt repayments, the Covid-19 crisis and the associated containment measures, in addition to fallout from the August 2020 explosion in the port of Beirut, which caused enormous damage and extensive loss of life.
A recovery in 2021 is contingent on the government embarking on a comprehensive IMF-supported economic reform programme envisaging debt restructuring, which might lead to increased international support and follow-up on the commitments made at an earlier donor conference, CEDRE. Any delay in the implementation of reforms may lead to a fourth successive year of deep GDP contraction.
Lebanon in the EBRD's 2020-21 Transition Report
