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LEBANON |
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Country presentation |
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Located at a strategic geopolitical crossroads situated on the eastern coast of the Mediterranean Sea, Lebanon has an area of 10,400 sq km (4,015 sq mi), extending 217 km (135 mi) NE–SW and 56 km (35 mi) SE–NW. It is bordered bordered on the North and East by Syria, on the South by Israel and on the West by the Mediterranean Sea. |
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Introduction |
Located at a strategic geopolitical crossroads situated on the eastern coast of the Mediterranean Sea, Lebanon has an area of 10,400 sq km (4,015 sq mi), extending 217 km (135 mi) NE–SW and 56 km (35 mi) SE–NW. It is bordered bordered on the North and East by Syria, on the South by Israel and on the West by the Mediterranean Sea. Lebanon - land of the Cedar - has been on the fringes and at times right at the heart of the Middle East conflict.
After 15 devastating years of civil war (1975-1990), Lebanon has had to overcome difficult post-conflict reconstruction challenges while trying to reconcile economic revival and better macroeconomic fundamentals. A comprehensive reform process in the areas of economic policy, industrial and agricultural modernisation, improved investment climate while the opening of the domestic market is under way to help the country regain its past glory as a leading financial power in the region, “the Switzerland of the Middle-East”.
The rebuilding of Lebanon was following a promising path when the attack against Prime Minister Hariri (February 14, 2005) destabilised the country, creating a regional crisis which widened further with the Summer 2006 conflict launched by Israel. Investor confidence now seems discouraged for long.
Cumulative public debt rose dramatically to a high US$ 39 billion in June 2006. At the end of 2006, official figures revealed a public debt over GDP ratio above 200%. In an attempt to reduce the ballooning national debt, the Rafiq Hariri government began an austerity program, reining in government expenditures, increasing revenue collection, and privatizing state enterprises, but economic and financial reform initiatives stalled and public debt continued to grow despite receipt of more than $2 billion in bilateral assistance at the Paris II Donors Conference. The Israeli-Hizballah conflict caused an estimated $3.6 billion in infrastructure damage in July and August 2006, and internal Lebanese political tension continues to hamper economic activity. The international community, including several EU member states, agreed at the successful Paris III donor conference to provide Lebanon with some relief from its very high debt burden and other economic problems. Consequently, Lebanon received financial assistance amounting to $ 7.7 billion, 20 percent of total debt.
Thanks to a long tradition of an open market, Lebanon has maintained close links with the Arab world, the United States and Europe. A member of the League of Arab States, Lebanon benefits from massive financial transfers and capital inflows from the Diaspora of 15 million Lebanese living abroad. Aside from large-scale infrastructure projects, the government has always taken care not to intervene in the private sector, which accounts for 90 percent of GDP.
The outgoing government's structural reform gave priority to privatising a number of utility companies, including telecommunications, electricity, water and transport. The 2000 Privatisation Law sets the framework for privatisation of State-owned enterprises. Proceeds from privatisation are slated to bring in US$ 10 billion over the period 2003-2007, to be assigned entirely to debt repayment.
In conclusion, according to the World Bank (2006 CAS Report), “the country has strong comparative advantages that should allow much faster longer-term real GDP growth of more than 5 percent per annum. These advantages include: strong entrepreneurial skills, skilled human resources, an open economy, a favourable geographic position, and a modern financial sector able to attract a high level of foreign investment, all of which will help provide Lebanon with a base for future growth and the development of a modern, competitive, and outward-oriented economy.” |
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Challenges |
Several factors help to contribute to providing Lebanon with a propitious environment for local and international investments. Indeed, with its liberal economic regime, it safe business environment, the wide access it gives to the markets of the Middle East and its extremely highly-skilled labour force, the country can guarantee investors the very best conditions for the development of their businesses. Lebanon has several factors in its favour:
- A geostrategic situation which provides access to a market of almost 300 million consumers.
- The quality and the competence of human resources whose salaries are relatively moderate help them increase their productivity.
- An infrastructure in the country which has been completely rehabilitated and renovated during the past few years which enables them to lower the cost of their investments.
- A system of guarantees for investments and the moderation of the taxation rates in force contributes to an increase in profit margins.
- A financial system which provides for the free circulation of capital of all types, including profits and dividends.
- A legal Lebanese framework exempt from discrimination between nationals and foreigners and a law which authorises non-Lebanese nationals to possess the totality of shares in a Lebanese company.
Tourism occupies an important place in the economy. The mildness of the climate, the snow-capped mountains, the valleys and the Mediterranean Sea explain the attraction that this country exercises on travellers. In the past the customers came from Europe and the USA, today they come in large majority from the Middle East and Europe.
Financial services, publishing activities, advertising and publicity, consulting are well-reputed and continue to develop. The country is the leading producer of advertising spots in the Middle East.
Recent years were marked by the arrival of foreign investments of Arab origin which registered the greatest growth over the past ten years with a volume that reached 650 million American dollars, according to the annual report of the Arab Agency for Investment Guarantees. Concerning the distribution of FDI per sector, 85% of investments concern the tertiary sector (hotels, shopping centres, etc.). Saudi investments represented 53.8% of the total in 2002, followed by the United Arab Emirate projects (29.3%) and Kuwaiti (15.4%). Lebanon occupies the second place among Arab countries on the foreign direct investment level and benefited from 22.3% of the total of Inter-Arab investments in 2002, while this rate was around 8.5% in 2001 and 19.3% in the year 2000. |
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References |
| Capital |
Beirut |
| Surface area |
10,452 km2 |
| Population |
4,500,000 inhabitants |
| Languages |
Arabic, French, English, Armenian |
| GNP (dollars) |
5 000 US$ |
| GNP per capita (dollars) |
US$ 6,033; (6,932 in ppp.) - WDI 2005 |
| Currency |
Lebanese Pound (LBP).
1 Euro = 2.04LBP – 1 US$ = 1.53 LPB |
| Religion |
Muslims (70 %), Christians (30 %) |
| National holiday |
22 November (independence in 1943) |
| Association Agreement with EU |
Signed on 17/06/2002; implemented on 1/03/2003
EU web site: http://www.dellbn.cec.eu.int
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| WTO membership |
Observer since 1999 |
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