VZCZCXRO4353
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #0184/01 0481443
ZNR UUUUU ZZH
R 171443Z FEB 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 4225
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000184 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/CORREA 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: FINMIN SAYS IMF PLEASED WITH LEBANON'S GROWTH IN 
2008 (ECONOMIC WEEK IN REVIEW, FEBRUARY 9 - 15, 2009) 
 
CONTENTS 
-------- 
 
-- CHATAH SAYS IMF PLEASED WITH LEBANON'S GROWTH IN 2008 
-- INFLATION REACHES BETWEEN EIGHT AND TEN PERCENT IN 2008 
-- FINANCE MINISTRY'S UNDP REFORM PROJECT SHORT ON FUNDING 
-- TRADE DEFICIT UP 40.7 PERCENT IN 2008 
-- 28 PERCENT OF THE POPULATION IS POOR, EIGHT PERCENT LIVE IN 
EXTREME POVERTY IN 2005 
-- SOCIAL AFFAIRS MINISTRY PRESENTS STUDY ON STREET CHILDREN 
-- LEBANON RANKS 101 WORLDWIDE IN E-GOVERNMENT READINESS 
-- BEIRUT TOPS LIST OF 44 PLACES TO VISIT IN 2009 
 
 
CHATAH SAYS IMF PLEASED 
WITH LEBANON'S GROWTH IN 2008 
-------------------- 
 
¶1. (SBU) In a February 11 meeting with the USAID Administrator's 
Special Assistant for the Middle East George Laudato and the 
Ambassador, Finance Minister Mohammad Chatah said a recent IMF 
delegation, led by IMF Deputy Managing Director Murilo Portugal, was 
pleased with Lebanon's growth in 2008, estimating the growth rate at 
8%.  Chatah said he was using a conservative growth estimate of 3% 
for 2009, but still expected the economy to weather the 
international financial crisis reasonably well, after the Lebanese 
banking sector saw a 14.5% increase in assets in 2008.  Though he 
was still concerned about Lebanon's fiscal position, given the 
ongoing budget battles in the cabinet, he noted that the recent 
cabinet decision to reform the gasoline excise tax would bring in 
more than $500 million annually to the state coffers. 
 
INFLATION REACHES BETWEEN 
EIGHT AND TEN PERCENT IN 2008 
-------------------- 
 
¶2. (U) On February 2, Governor of the Central Bank of Lebanon (CBL) 
Riad Salameh publicly noted that inflation reached an average of 
eight to ten percent in 2008.  Meanwhile, private firm Consultation 
and Research Institute (CRI) said the figure was 10.74 percent. 
According to CRI, an increase in food prices had the most 
significant effect on the overall inflation. 
 
¶3. (U) However, inflation growth slowed in December 2008 compared to 
December 2007 as a result of the weakening of the euro and lower 
international oil prices.  According to the Central Administration 
of Statistics' Consumer Price Index (CPI), inflation rose by 5.5 
percent in the month of December 2008 compared to December 2007. 
 
FINANCE MINISTRY'S UNDP REFORM 
PROJECT SHORT ON FUNDING 
-------------------- 
 
¶4. (SBU) Chris de Clercq, UN Development Program (UNDP) Project 
Manager on Capacity Development for Fiscal Reforms and Management at 
the Ministry of Finance (MOF), told us on February 12 that his 
office is one-year short on funding for completion of the 2008-2010 
phase of the project.  The MOF has access to $2.2 million covering 
costs till the end of 2009, and needs an additional $2.3-2.4 million 
for 2010.  This 3-year project is implemented from EU contributions 
to UNDP for reforms at the MOF.  FinMin Minister Mohammad Chatah is 
approaching donor countries to bridge this one-year funding gap, and 
raised this issue during his February 11 meeting with Laudato and 
the Ambassador. 
 
TRADE DEFICIT UP 40.7 
PERCENT IN 2008 
-------------------- 
 
¶5. (U) According to the Higher Customs Council, Lebanon's trade 
deficit rose by 40.7 percent in 2008 compared to 2007, reaching 
$12.6 billion, largely because of high oil prices.  Import activity 
rose by 36.6 percent in 2008, exceeding the 23.5 percent rise in 
exports.  The UAE was Lebanon's main destination for exports, with 
ten percent of total exports, followed by Switzerland (9.5 percent), 
Iraq (7.7 percent), Syria (6.4 percent), and Turkey (six percent). 
Lebanon's primary exports were jewelry, followed by electrical 
equipments and products, base metals, chemical products, and 
prepared foodstuff.  Meanwhile, the U.S. retained the largest share 
 
BEIRUT 00000184  002 OF 002 
 
 
of Lebanese imports, with 11.5 percent of total imports, followed by 
China (8.6 percent), France (8.3 percent), Italy (6.9 percent), and 
Germany (6.4 percent).  Lebanon's primary imports included mineral 
products (including fuel oil), followed by cars, electrical 
equipment and products, base metals, and chemicals. 
 
28 PERCENT OF THE POPULATION IS POOR, 
EIGHT PERCENT LIVE IN EXTREME POVERTY IN 2004 
-------------------- 
 
¶6. (U) According to two studies on poverty and living conditions by 
the UN Development Program (UNDP) and the Ministry of Social Affairs 
(MOSA), 28 percent of the Lebanese population was categorized as 
poor in 2004, while eight percent or around 300,000 people lived in 
extreme poverty (living on less than $2.40 a day).  The bulk of 
poverty was located in the north (Tripoli, Akkar and Minieh-Dennieh 
areas), south (Jezzine and Saida), and the Baalback-Hermel region in 
the Bekaa Valley.  Ten to 12 percent of extreme poverty is located 
in south Lebanon and the Bekaa, while 17 percent is located in the 
north. 
 
SOCIAL AFFAIRS MINISTRY PRESENTS 
STUDY ON STREET CHILDREN 
-------------------- 
 
¶7. (U) On February 5, the Ministry of Social Affairs, in 
collaboration with the Arab Council for Childhood and Development 
and St. Joseph University, presented its most recent study on street 
children in Lebanon.  The study is a qualitative analysis of the 
situation of street children through the observation of 28 sites 
throughout Lebanon.  Most of the children who agreed to participate 
in the study saw themselves as "fugitives" from family breakdowns 
and put the blame entirely on parents for their situation.  The 
study recommended the development of an inter-ministerial social 
policy supported by protection and rehabilitation strategies, as 
well as the empowerment of NGOs, municipalities, and organizations 
to take preventive actions at a local level. 
 
LEBANON RANKS 101 WORLDWIDE 
IN E-GOVERNMENT READINESS 
-------------------- 
 
¶8. (U) According to Brown University's survey on electronic 
government readiness, Lebanon ranked 101 out of 197 countries 
worldwide and ten out of 18 MENA countries.  In 2007, Lebanon had 
ranked eight out of 18 MENA countries.  The survey noted that in 
Lebanon, 37 percent of government institutions offered online 
services, with relevant publications made available.  Of all 
websites, only 16 percent were regularly updated and personalized. 
The study evaluates national government websites on the basis of 
information availability, service delivery, and public access. 
 
BEIRUT TOPS LIST OF 44 
PLACES TO VISIT IN 2009 
-------------------- 
 
¶9. (U) The New York Times' list of "44 places to go in 2009" 
included Beirut.  The report chose Beirut as one of 12 destinations 
for luxury travel, one of eight destinations to visit for food, and 
one of nine trendiest destinations for partying.  According to the 
latest figures from the Ministry of Tourism, the number of tourists 
visiting Lebanon in 2008 reached 1.33 million, or a 31 percent 
increase compared to 2007. 
 
SISON