Why Lebanon’s stimulus package is doomed…

This article first appeared at Executive Magazine on 14 January 2013

When Riad Salameh, the governor of Banque du Liban (BDL), Lebanon’s central bank, announced in November $800 million for a new stimulus package to help the economy grow in 2014 — he was perhaps guilty of overstatement. While there will be $800 million made available, what Salameh neglected to mention was that $468 million of it was actually unused money from 2013’s stimulus package which will be rolled over. As such, just $332 million of purely new money will be extended, less than 1 percent of gross domestic product (GDP).

While Salameh was quick to stress that the primary reason for not releasing more money was fear of inflation, there are other factors that may have caused him to ease off. Put simply, the impact of the first stimulus package remains unclear, while the general weakness in the economy and low levels of confidence mean that the positive effect of any new round of stimulus is likely to be muted. In such a climate, and with the ongoing political impasse showing no signs of easing up, the governor is faced with the unenviable task of again shouldering the burden of moving the economy forward with limited tools.

Read the rest of the article here:
http://www.executive-magazine.com/economics-and-policy/6064/central-bank-injection-economy-lebanon

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