International Monetary Fund. Monetary and Capital Markets Department
This paper discusses findings of the assessment of Lebanon’s financial system. Lebanon has maintained financial stability for the last quarter century during repeated shocks and challenges. Over time, macroeconomic and financial vulnerabilities have accumulated. Although central bank policies have helped to maintain confidence, fiscal adjustment is needed to reduce risks to financial stability. The banking system has thus far proven resilient to domestic shocks and regional turmoil, but the materialization of severe shocks could expose vulnerabilities. Significant progress has been made to further strengthen Lebanon’s financial integrity framework, with some scope for improvement remaining.
International Monetary Fund. Middle East and Central Asia Dept.
Following an extended impasse, Lebanon has a new president and a new prime minister, paving the way for a number of political changes. When formed, the new government will face a challenging policy environment. The Syrian crisis continues to dominate Lebanon's economic outlook, and the associated influx of refugees (about a quarter of the population) has few, if any, international parallels. GDP growth is still subdued and Lebanon's debt burden is rising, despite modest primary surpluses. Moreover, the economy remains vulnerable to shifts in deposit inflows, which have slowed notably since last year's Article IV consultation. Most recently, the Banque du Liban (BdL) engaged in a sizable financial operation that has (among other objectives) helped restore international reserves.