SAWT BEIRUT INTERNATIONAL

| 4 October 2022, Tuesday |

What are the IIF’s economic forecasts for Lebanon in 2022?

The head of the Land Transport Union, Bassam Tlais, called during a general assembly of public drivers in the north, all the land sectors in Lebanon and the union federation in the Labor Union, to take to the street next Thursday in a day of union anger.

He pointed out that “the government did not abide by its promises to the transport sector, despite its announcement in the name of its president of the terms of the agreement, provided that implementation will begin on the first of last month.”

Tlais announced the open strike on Thursday throughout the entire Lebanese territory, noting that this day is not for drivers, but for all Lebanon’s workers and Lebanon’s unions, led by the General Labor Union, and for every affected Lebanese in pain.

The Institute of International Finance considers that the risks of complete economic collapse and financial collapse for Lebanon are imminent, if politicians do not put aside their differences as soon as possible, and develop two scenarios for its economic outlook in 2022 that depend on the political track, reforms and elections.

The chief economist at the Institute, Gerbis Iradian, prepared two revised scenarios for the economic outlook in 2022, and explained to Sawt Beirut International that the first scenario assumes that political paralysis will prevail and that the upcoming parliamentary elections will fail to bring about a major change in the country’s political landscape and improve relations with the Gulf states. In such a situation, no major reforms will be implemented, and no agreement will be reached with the IMF.

The economy will continue to contract, and the exchange rate of the lira on the black market will drop to more than 40,000 pounds to the dollar by the end of 2022. The multiple exchange rates will continue even if the Banque du Liban raise the official rate to around 9,000 pounds to the dollar. Inflation will remain in the triple digits, the current acAdequate financial support from the International Monetary Fund, the World Bank and CEDRE, with the implementation of comprehensive reforms, will lead to a significant appreciation in the exchange rate of the lira on the black market, and to the unification of the multiple exchange rates at around 15,000 Lebanese pounds by the middle of 2022. In this case, The inflation rate could begin to decline gradually from more than 200% at the end of 2021 to 35% by the end of 2022.count deficit will remain large, official reserves, excluding Eurobond holdings, will continue to fall to less than $10 billion by the end of 2022, and public debt will exceed 300% of GDP in the absence of “haircuts” on Eurobond.

As for the second scenario, the Mikati government is supposed to resume its sessions and agree to implement crucial reforms, which will lead to an agreement with the International Monetary Fund before the end of March. Such a scenario would facilitate access to additional international aid in the hope of improving relations with the Gulf states to lift banned imports from Lebanon and encourage more investment by Saudi Arabia, the UAE, Qatar and Kuwait. In this case, real GDP growth could start to recover to 4.5% in 2022.

 

    Source:
  • Sawt Beirut International