VZCZCXRO7101
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHDH RUEHIK RUEHKUK RUEHLZ RUEHROV
RUEHSL RUEHSR
DE RUEHLB #1023/01 2591442
ZNR UUUUU ZZH
R 161442Z SEP 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5717
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 001023 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EPET ETRD PGOV LE
SUBJECT: IMF MISSION IN BEIRUT EVALUATES SECOND QUARTER 
MACROECONOMIC PERFORMANCE (ECONOMIC WEEK IN REVIEW, SEPT 7 - 13, 
2009) 
 
CONTENTS 
-------- 
 
-- IMF MISSION IN BEIRUT EVALUATES SECOND QUARTER MACROECONOMIC 
PERFORMANCE 
-- IMF RAISES 2009 GROWTH ESTIMATE TO 7% 
-- LEBANON EXPECTS TO RECEIVE NATURAL GAS MID-SEPTEMBER 
-- FIRST QUARTER FIGURES: TRADE AND FISCAL DEFICIT RISE 
-- COUNTERFEIT WORKSHOP CALLS ON CENTRALIZING ENFORCEMENT EFFORTS 
AND SPECIALIZED IP COURTS 
 
IMF MISSION IN BEIRUT EVALUATES 
SECOND QUARTER MACROECONOMIC PERFORMANCE 
---------------------------------------- 
 
¶1. (SBU) On September 10, Domenico Fanizza, International Monetary 
Fund (IMF) Division Chief for Middle East and Central Asia, met with 
caretaker Finance Minister Mohammad Chatah to discuss macroeconomic 
performance in the second quarter of 2009. Fanizza is leading an 
Emergency Post-Conflict Assistance (EPCA II) mission to monitor 
Lebanon's economic and monetary performance for the second quarter 
of the year as EPCA II expired in June.  Head of the finance 
ministry's economic unit Rola Azour told us that the IMF is waiting 
for a new government to be in place to discuss a post-EPCA II 
arrangement. 
 
IMF RAISES 2009 GROWTH 
ESTIMATE TO 7% 
---------------------- 
 
¶2. (U) Following a meeting with Central Bank of Lebanon (CBL) 
governor Riad Salameh on September 10, the IMF noted that Lebanon's 
economic growth could reach 7% in 2009, up from its earlier 
prediction of 4%.  Salameh also highlighted Lebanon's unprecedented 
$3 billion balance of payments surplus during the first half of 
2009, as well as the drop to 67% in the deposits dollarization rate, 
as signs of growing confidence in the country's monetary position. 
 
 
LEBANON EXPECTS TO RECEIVE 
NATURAL GAS MID-SEPTEMBER 
-------------------------- 
 
¶3. (U) The ministry of energy and water announced that Lebanon will 
start receiving natural gas from Egypt mid-September through the 
Pan-Arab Natural Gas Pipeline (Egypt-Jordan-Syria-Lebanon), based on 
an agreement signed between Egypt and Lebanon earlier this year. 
The gas will be routed to the Beddawi power station in northern 
Lebanon.  The agreement with Egypt will reduce the annual deficit of 
the national power utility Electricite du Liban (EDL) and will 
enable Lebanon to save $200 million yearly on its fuel bill, 
caretaker Minister of Energy and Water Alain Tabourian reportedly 
said. 
 
FIRST HALF FIGURES: TRADE 
AND FISCAL DEFICIT RISE 
------------------------- 
 
¶4. (U) Lebanon's trade deficit reached $6.1 billion during the first 
half of 2009, up 10.3% year-on-year.  Imports rose by 7.1% to $7.8 
billion, while exports declined by 3.3% to $1.69 billion. 
Switzerland was Lebanon's main destination for exports, with $395 
million or 23% of total exports, followed by UAE (9%), Iraq (9%), 
Saudi Arabia (8%), and Syria (6%).  France was the main source of 
Lebanon's imports with $974 million or 12% of total imports, 
followed by the U.S. (9%), China (9%), Germany (8%), and Italy (7%). 
 
 
¶5. (U) According to the ministry of finance, the fiscal deficit 
reached $1.55 billion in the first half of 2009, up by 18% 
year-on-year.  The deficit amounted to 26.8% of total budget and 
treasury expenditures, down from 27.7% compared to the first half of 
2008, thus improving slightly.  Overall government expenditure 
reached $5.81 billion, up by 21.9%, and total revenues reached $4.26 
billion, up by 23.4% compared to the first half of 2008.  Debt 
servicing increased by 14.6% to $1.85 billion, accounting for 31.8% 
of total expenditures and 45% of budgetary spending.  Excluding debt 
servicing, the budget primary surplus reached $1.87 billion (or 
45.6% of budget expenditures), up from $1.39 billion in the first 
half of 2008. 
 
COUNTERFEIT WORKSHOP CALLS ON CENTRALIZING 
ENFORCEMENT EFFORTS AND SPECIALIZED IP COURTS 
--------------------------------------------- 
 
BEIRUT 00001023  002 OF 002 
 
 
 
¶6. (U) During the September 9 closing ceremony of an eight-week 
workshop on counterfeit and fake goods organized by the Institute of 
Finance and the Brand Protection Group (BPG), participants issued a 
series of recommendations intended to improve the intellectual 
property (IP) environment in Lebanon.  Participants supported 
establishing a special committee to centralize the work of the 
various inspection bodies (customs, police, army, ministry of 
economy and trade, ministry of public health, and the state-owned 
tobacco company), and a central database on counterfeits. 
Recommendations also included increasing IP awareness among the 
public and private sector, removing political coverage for 
infringers, establishing specialized IP courts, and imposing tougher 
sentences. 
 
SISON