Wednesday, October 17, 2018
Directory Directory Subscribe
Login
 

Lebanon hires McKinsey to help revamp the economy

 
 

Please, enter data

Please, enter data

Bloomberg, 12 January 2018

Lebanon is hiring management consulting firm McKinsey & Co. to help restructure an economy that’s overly reliant on remittances and banking, and grappling with high unemployment, Economy and Trade Minister Raed Khoury said.
 
The six-month agreement with McKinsey will be signed by the end of this week and the company will start work next week with various ministries and economic bodies to formulate a new economic vision for the Arab world’s most indebted nation, Khoury said in an interview at his office in Beirut on Monday.
 
“The government has been historically nearly absent in putting policies and procedures to do that,” said the former Barclays Wealth banker and founder of Cedrus Invest Bank. “The first thing we want to do is to identify our economic identity and then go to more specific things.”
 
With at least three times as many Lebanese living abroad than in Lebanon, the country has been sustained by remittances that have kept flowing in, especially from Lebanese workers in Gulf and African countries.
 
Banks use the money to buy government debt, which stands at 150 percent of economic output, according to Khoury. That is one of the world’s highest ratios, along with Japan and Greece.
 
Record Reserves
With foreign reserves at a record $43 billion, the Lebanese currency has been able to survive the political storms that have at various times left Lebanon without a president or prime minister, and the influx of 1.5 million Syrian refugees who have strained its resources.
 
But this model is “becoming very risky” and no longer sustainable, Khoury said, predicting that if nothing is done, the debt-to-GDP ratio will go as high as 170 percent in the next few years. He said Lebanon should aspire to emulate the economy of Singapore, another small country with many ethnic groups.
 
Lebanon’s governance has suffered from the legacy of the 1975-1990 civil war, and the country didn’t have a budget for 12 years until parliament passed one in 2017. Even now, with discussions under way over the new budget, not much thought is being given to the impact that decisions, such as imposing taxes, will have on various sectors, he said.
 
“We’re doing the budget for 2018, you think there is a mentality of a 3-year, 5-year, 10-year plan behind it? Zero,” he said. “It’s not chaos, it’s a culture.”
 
‘Tricky’
David Butter, associate fellow at Chatham House in London, said such strategic plans “might not do any harm, but in the case of Lebanon it’s a bit more tricky.” McKinsey will have to analyze and quantify various areas including services, financial flows and parallel economies such as the one controlled by the Iranian-backed Hezbollah group, which are hard to quantify, he said.
 
“You have a lot of gray areas which might be difficult to put into the context of some sort of a strategic plan,” Butter added.
 
The minister also said overall unemployment in 2014 stood at 24 percent, with rising youth unemployment exceeding 35 percent, the last year for which figures are available at the ministry. Lebanon’s trade deficit was $11.77 billion by September 2017, with exports at $2.12 billion and imports at $13.89 billion.
 
These figures show that Lebanon has no choice but to restructure its economy, said Khoury. “It’s not a luxury anymore,” he said.
 
Bloomberg
12/01/2018
  COMMENTS
Login to Add Your Comment  (for subscribers) | Subscribe

 

Latest News

Russian and Egyptian presidents meet to boost trade
Arab News, 17 October 2018

Russian President Vladimir Putin is hosting his Egyptian counterpart Abdel-Fattah El-Sisi for talks focusing on ways to boost trade between the two nations.
...

Read full story
Russian and Egyptian presidents meet to boost trade
Dubai Route 2020 station bridges work on track
TradeArabia News Service, 16 October 2018

Dubai officials said all the bridge works related to the Route 2020 network will be completed by the end of next month.

The new route covers the ...

Read full story
Dubai Route 2020 station bridges work on track
Egypt reaches $3bn financing deal with World Bank
Xinhua , 16 October 2018

The World Bank (WB) has agreed on a new financing deal of three billion U.S. dollars with Egypt, Egyptian Investment Ministry said in a statement on Tuesday.
...

Read full story
Egypt reaches $3bn financing deal with World Bank
Back to Home Page 4005 --- 0 <><><> 643.5.....exvideo=0....eximage=0
P -1
BR 0

 
KSA Manufacturing Tech Show
22 - October 2018
3rd Annual Future Police Technology and Forensics Summit GCC 2018
12 - November 2018
3rd Annual RetrofitTech KSA
18 - November 2018
3rd Annual Mosque Design & Development Summit
26 - November 2018
3rd Annual Dubai Green Hotel Innovation
26 - November 2018
 
  View more  

Market Indecies
 
Saudi SE - 2.32%
Dubai FM - 4.53%
Abu Dhabi SE - 3.99%
Kuwait SE - 1.51%
Doha SM - 8.36%
Muscat SM - 6.18%
Casablanca SE Closed
Bahrain SE - 0.98%
Cairo SE Closed
Amman SE - 1.12%
 

Quick Links
  Reports  
  Articles  
  Brochures & Flyers  

Up-coming events
  Sustainable Digital Ecosystem Summit - 4 December - 6 December 2018  
  Beirut Boat - 30 April - 4 May 2019  
  Project Lebanon - 18 June - 21 June 2019  
  Energy Lebanon - 18 June - 21 June 2019  
IFP Group Events Calendar

Magazine sections
  Finance  
  Zoom  
  Growth Markets  
  Regional Overview  
  Editorial  
  Tips and Tricks  
  Spotlight  
  Home Finance  
  Our Meetings
 
  Focus
 
  News
 
  Legal Issues
 

 

               
IFP Corporate
• IFP Emirates
• IFP Lebanon
• IFP Qatar
• IFP Iraq
• REC Saudi Arabia
• IFP China
Lebanon
Beirut Boat
Energy Lebanon
Project Lebanon
Sustainable Digital Ecosystem Summit
Qatar
Heavy Max
Hospitality Qatar
HQ - Food Qatar
Project Qatar
Qatar Stone Tech
Iraq
Saudi Arabia
Riyadh Motor Show
 
 
  IMC
IFP Group 2018 - © All rights reserved