The Washington-based International Monetary Fund (IMF) has concluded its Article IV consultation with Lebanon and says economic growth remains low with GDP growth estimated to be about 1 to 1.5 per cent in 2017 and 2018.

It says the subdued growth is a result of weak performance from key sectors such as real estate and construction.

Going forward, the IMF expects growth to rise to 3 per cent over the medium term. Inflation spiked to 5 percent in 2017 as the cost of oil imports rose and the US dollar weakened.

The fund added that growth could be further strengthened with the early resolution of the conflict in Syria. The more than $11bn of aid pledged to Lebanon at a conference in Paris in April also represents an opportunity for growth-enhancing reforms and investment. The fund also cautioned that vulnerabilities and downside risks remain, stemming from regional political developments as well as domestic events.

For economic reform, the IMF recommended increasing VAT rates, gradually eliminating electricity subsidies, and restraining public wages. It also encouraged the authorities to redouble their efforts to improve governance and reduce corruption, and called for further improvements to the statistical system.