Lebanon, though profoundly shaken by the civil war that has engulfed neighbouring Syria since 2011, is working hard to mitigate the impact of the conflict on its economy, the director general of the country’s finance ministry has said.
“We clearly face a very difficult situation,” Alain Bifani told GlobalMarkets, “but there is no risk that the economy will be derailed.”
Speaking of the country’s institutional resilience to hard knocks, Bifani said: “There are tensions: on the fiscal front, it’s tough, the economy is not growing as it should, nor is it creating jobs as it should. But at the same time, the social net is working, more or less. We have been able to absorb a huge shock.”
Lebanon, which has a population of just 4.5 million, has taken in more than 1.5 million Syrian refugees. That has taken its toll: since 2010, when Lebanon’s GDP grew by 8%, annual growth has oscillated between just 0.9% and 2.2%, according to the World Bank. The Syrian war also triggered a political crisis, with Lebanon’s main parties fighting over which side to support in the conflict. As a result, the country has been left without a president for two years.
Bifani sought to remain positive despite all this. He pointed to strong central bank reserves — $40bn as recently as the end of August — and the endurance of the country’s civil service. The education system, for example, has managed to incorporate hundreds of thousands of Syrian children.
When asked whether this has been the hardest test in his career, Bifani, who has worked at the finance ministry for the past 16 years, said it was hard to say. “I don’t remember a period that was easy,” he said. “Lebanon is in a permanent state of crisis. I think we’ve become experts at managing crises.
“We’ve had everything: we’ve had war, we’ve had blockades, we’ve had periods without a president, without a government, we’ve had political assassinations, we’ve had internal conflict.”
Lebanon went through a civil war of its own in the 1970s and 1980s – a conflict that scarred the country and produced a generation of bankers and politicians used to working through deep, seemingly irresolvable challenges.
Bifani said one of the keys to handling these challenges was to invest in the future. He spoke enthusiastically of plans to update Lebanon’s crumbling infrastructure, ranked 101st in the world by the World Economic Forum.
“The road works have now been launched,” he said. “Investment into railways, ports, electricity, water quality are next in line.”
Over the next five years, Lebanon intends to spend $2.5bn billion on infrastructure, Bifani said. “That will compensate a little for the slowing growth of the economy. But more importantly, it will give us services we desperately need.”