1. Regional Transformation and its Implications
on Economic Freedom in Lebanon
Dr. Mounir Rached
Georgina Manok
6th Economic Freedom of the Arab World Conference
Beirut, Gefinor Rotana Hotel, October 20.-21., 2011

2. Outline
• Overview
• Impact of Regional Turmoil
• Economic freedom ranking & progress
• Challenges and the Way Forward

3. Impact of Regional Turmoil
• The overall impact so far has been negative
on Lebanon’s economic environment
• Growth slowed down to 2%
• Consumption slowed down & could have
declined in real terms
• Inflation climbed to over 6%

4. Impact …
• Goods and Services trade has lost a good
part of its momentum since the escalation
of the events in the region
• Net trade deficit escalated
• Imports rose reflecting in part
international price increases
• Most exports declined except agr. exports
• Exports to Arab countries decreased

5. Special Focus on Tourism
• Direct Economic Impact of the Uprising:
– Around 600,000 Arab tourists drive into
Lebanon yearly through Syria -- the only
country Lebanon shares an open border with.
• Passage through Syria is a cheap option for most
regional tourists.
• The number of tourists in the first half of 2011 by
20% to 774,214 from 964,067 in 1st half of 2010

6. Impact …
• Remittances , however improved by 11%
• Financial flows declined by 15% in 1st half
• FDI declined
• Balance of payments recorded a deficit of
$500 million

7. Impact ….
Banking is less affected by the turmoil
• Broad money expanded- inflow of foreign
deposits
• Conversion of deposits into US dollars
• Lending activity
• Decline in Central Bank reserves (BoP
deficit)

8. Impact…
• Equity bond markets
Declined

9. Impact on Economic Freedom
Lebanon, continues to have a relatively low
ranking in the global economic freedom index
77th globally
9

10. Impact on Econ Freedom
- Its rating is burdened by few important
components
- Corruption is perceived to be high-one of the
highest among peers. 139nd out of 179
Corruption is well entrenched
10

11. cont
• Property rights (enforcement of contracts) score is low
Its legal system is perceived to be politically
manipulated
• Investment freedom score is low
Restricted licensing- cumbersome administrative
procedures- multiple phases- Ceilings on certain investments
No restriction ,however, on capital flows-private &
enterprises
11

12. II. Relative ranking in MENA
Top Economic Freedom Achievers
in the Arab World
(Fraser Institute)
8.2
8
Bahrain
Final Grade
7.8 Jordan
7.6 Kuwait
Lebanon
7.4
Oman
7.2 Qatar
7
2002 2003 2004 2005 2006 2007 2008
12

13. Challenges and the Way Forward
• What Lebanon has to do to:
– improving Economic Freedom

14. WTO Accession Essentials
• Lebanon’s accession process to the WTO
has started since November 1998.
• In 2000, the Lebanese government
adopted a framework to reform Lebanon’s
legal and regulatory environment, to
conform to the WTO’s Multilateral
Agreements and the accession master plan
was finalized in October of the same year.

15. Pending Laws for WTO Accession
1. International Trade and Licensing Law
2. General Food Law
3. Law on Standards, Technical Regulation and Conformity Assessment Procedures
4. Law on Standards
5. Law on Animal Quarantine
6. Removal of NSSF Certificate Requirement for Importing/Exporting Activity of
Established Traders
7. Amendments to the Budget Law to Unify/Transform the Ad-Valorem Fees for Services
Rendered
8. Competition Law
9. Additional Intellectual Property Rights Legislation to Modernize Laws and Systems of
Commercial and Industrial Property

16. Challenges to WTO Accession
• Political Challenges
– Lack of consensus on the role of WTO in
economic priorities especially for the current
government
• Stakeholders Buy-In
– Especially in the agricultural and industrial
sectors
• Technical Capacity
– Technical deficiencies in local expertise regarding
some of the prerequisite laws (ex: competition
law)

17. Thank You