Lebanon’s Gross Domestic Product (GDP) is expected to increase by one percent in 2002 and by 1.5 percent in 2003, according to the Economist Intelligent Unit (EIB)’s quarterly report. The Unit lowered its predictions due to the nation’s low private sector confidence and poor state of public finances.
According to the report, the successful sale of the nation’s two mobile phone licenses is a key test of the government’s economic reform program. If the sale fails, the cancellation of the Paris II conference of foreign donors is very likely. The country’s debt servicing costs are expected to reach $2.5 billion by year’s end, equivalent to 14 percent of GDP.
Despite lengthy fiscal adjustments, including the introduction of the value added tax (VAT), which have stabilized the deficit, they are not substantial enough to alter the structural imbalances in public finances, the report asserted.
The report warned that pressure on the local currency may pick up pace in the second half of the year and could continue into 2003 due to an increase in American interest rates expected to narrow the differential between returns on local and foreign currency facilities. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
