The report urged Beirut to 'move forward vigorously with macroeconomic stabilisation and structural reforms so as to seize full advantage of the positive momentum generated by the Paris II donors conference'. It also called on the government to address structural problems in state electricity company Electricite du Liban (EdL), whose privatisation has also been delayed, so as to stem its financial losses and prevent the need for continued government support.

The IMF says that reducing the country's public debt pile remains the principal obstacle for sustainable growth and it urged the government to make 'deep-seated revenue and expenditure reforms'.

The fund also warned that the high proportion of government debt on the balance sheets of local private banks is a potential threat to the country's banking system.

While the fund acknowledges that the exchange rate peg to the US dollar has been helpful in strengthening confidence and remains appropriate, it encourages the government to consider greater exchange rate flexibility as part of a package of structural reform policies.

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