Gross domestic product (GDP) growth slowed to only 1 per cent in 2005, as political turmoil caused the contraction of both public and private demand, says the IMF in the conclusion to its latest Article IV consultations. Public finances were weakened by rising oil prices, economic slowdown and payment of arrears, and government debt increased to 175 per cent of GDP.
The report highlights the risks of the huge debt burden, the high degree of dollarisation in the economy, and the current account and budget deficits. Predictably, the IMF calls on Beirut to accelerate structural reform.
'Directors urged the authorities to restore the financial viability of the state electricity company to reduce the associated large drain on the budget,' says the report. 'They also called upon the authorities to correct looming imbalances in pensions and the social security system.'
Selected economic indicators200320042005Domestic economy (%)Change in real GDP5.06.01.0Change in consumer prices1.33.00.3External economy ($ '000 million)Exports1,4001,6001,800Imports6,7008,7008,700Current account balance-3,000-4,000-2,800Financial variables (% of GDP)Fiscal balance-13.2-8.5-7.9Gross government debt167.8164.7174.6Of which foreign currency78.384.485.7Source: IMF