Global consulting firm McKinsey & Co. presented a document detailing its proposal to jump start Lebanon's economy to President Michel Aoun this week. Blooberg reported over the weekend the publication got hold of the abridged version of the document, while the full version must be ratified by the new cabinet, which Prime Minister-designate Saad Hariri is still attempting to form following May’s elections.
"Tackling some of Lebanon’s biggest problems, including corruption, will be key to rebuilding the economy," Caretaker Economy and Trade Minister Raed Khoury said. The report highlighted some "quick wins" Lebanon can implement to get back on track - including legalizing cannibas production for exporting globally.
Khoury added Lebanon could legalize cultivation and export the drug for medicinal treatments: “The quality we have is one of the best in the world,” he said, adding cannabis could become a one-billion-dollar industry.
In the report, Bloomberg notes, "cannabis is cultivated clandestinely in the eastern Bekaa Valley, which is dominated by Hezbollah." Hezbollah has come under internationally scrutiny in recent years for its role in both international drug and arms trade - which helps to finance its militia and terrorist operations internationally.
Lebanon requires "an immediate and substantial" fiscal adjustment to improve the sustainability of public debt that stood at more than 150 percent of gross domestic product (GDP) at the end of 2017, the IMF executive board said in late June.
An IMF statement released June 22 said IMF executive directors agreed with the thrust of a staff appraisal which in February urged Lebanon to immediately anchor its fiscal policy in a consolidation plan that stabilises debt as a share of GDP and then puts it on a clear downward path.
Lebanon's debt to GDP ratio is the third largest in the world.
"Directors stressed that an immediate and substantial fiscal adjustment is essential to improve debt sustainability, which will require strong and sustained political commitment," the IMF executive board statement said.
It reiterated estimates of low economic growth of 1-1.5 percent in 2017 and 2018. "The traditional drivers of growth in Lebanon are subdued with real estate and construction weak and a strong rebound is unlikely soon," it said.
"Going forward, under current policies growth is projected to gradually increase towards 3 percent over the medium term."
Lebanon's economy has been hit by the war in neighbouring Syria. Annual growth rates have fallen to between 1 and 2 percent, from between 8 and 10 percent in the four years before the Syrian war. Two former pillars of the economy, Gulf Arab tourism and high-end real estate, have suffered.
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