Lebanon today presents itself as a country intent on rebuilding its future starting afresh from the rubble of the civil war on the one hand and the bloody conflict with Israel on the other, investing in the modernization of its infrastructures. The consequences of the recent Syrian crisis have contributed to the decline of infrastructure, especially in the transport and energy sectors, and for this reason the Government has identified a number of major infrastructure projects, nominated "Capital Investment Program" (CIP), with the aim of contributing to the country's economic growth. The CIP is an integral part of the "Lebanon Economic Vision 2025-2035", a plan launched in 2018 by the Lebanese government to achieve some fundamental objectives, including the increase in GDP, the reduction of public debt and the improvement of the trade balance. Worth over $22 billion, the CIP is the largest investment program in Lebanon's history. 40 percent of the projects will be financed with private investments in Private Public Partnership (PPP) mode.
The Lebanese government's proposal of 18 October to introduce a tax of 20 cents a day on calls made via the Internet (VoIP), using apps such as Whatsapp and Facetime, represented the culmination of a discontent that was actually already widespread among the population, which contests the administration of the country with street tensions in Beirut and other Lebanese cities. The unrest not only destabilized the government, leading to the resignation of Prime Minister Sa'd al-Din Hariri on October 29, but also had an impact on the Lebanese economic and financial situation. The country shows a weak GDP trend, a circumstance which has a negative impact on the debt/GDP ratio. The latter has risen to 155% with interest expenditure absorbing about 50% of tax revenues. The country also has external imbalances: the current account deficit reached 26,5% of GDP, eroding the stock of reserves in hard currency, which fell to around 33 billion. The decline in reserves represents an anomaly for a country that can benefit from a large volume of remittances fed by the approximately 14 million Lebanese living abroad; the decrease in the amount of hard currency is also due to the lower inflow of capital from international investors due to the increase in country risk. For these reasons, the country has been subject, in the recent past, to various downgrades by rating agencies, most recently Standard & Poor's, which, like Moodys and Fitch, has assigned Lebanon the CCC rating.
As reported byISPI, Institute for International Political Studies, the country's economic and financial criticalities have triggered a "bank run", a phenomenon that not even the reassurances of the governor of the Central Bank managed to appease. Local banks have reacted by imposing limits both on the withdrawal of dollars and on the volume of money transfers abroad, but these measures have not improved the picture, on the contrary they have accentuated the perception of emergency. Lebanon is now in a delicate situation which requires the immediate formation of a government with the aim of stabilizing the economy, strengthening the population's confidence and "attracting" international financial support. The consultations, scheduled for December 16, have been postponed again, due to the persistent impasse regarding the composition of the government. And this has led to an escalation of street protests.
For Beirut and the Lebanese economy, therefore, the future promises to be full of challenges, from the political deadlock to overcome to the economic-financial situation to stabilize. And Lebanon's weak economic performance has had an impact on the trend of Italian exports. In particular, after the 8,7% drop in 2018, the export of Italian goods to Beirut recorded a further contraction in the first eight months of 2019 (-5%). However, the need to open up to investment still offers many opportunities for Italian companies: Beirut welcomed 1,4 billion euros of Italian goods, above all refined petroleum products, but also jewellery, furniture and mechanical engineering goods. The local market, despite its small size, also has a high degree of openness to exchanges and triangulations in qualitatively high segments, and also represents a launching pad towards the Middle East area. In fact, Lebanese companies are well established in the Gulf countries and in Iraqi Kurdistan, working above all in the construction and engineering sectors, and it is here that the machinery that Lebanon imports from Italy is often re-exported. Here then is that the sectors in which there are greater opportunities for Italian companies are: energy sector, liquefied natural gas, water and irrigation, development of the port of Tripoli.
