After two years from its application, Lebanon has become the 68th shareholder of the European Bank for Reconstruction and Development (EBRD) looking ahead to become a country of operations after the vote of the EBRD’s Board of Governors, representing the Bank’s shareholders.

Lebanon becomes the 5th member country in the EBRD’s southern and eastern Mediterranean (SEMED) region, joining Egypt, Jordan, Morocco and Tunisia, where the EBRD provides support for policy reform and has been investing since 2012.

To date, the Bank has invested some €5.2 billion in 130 projects across the SEMED region in natural resources, financial institutions, agribusiness, manufacturing and services as well as infrastructure projects such as power, municipal water and wastewater and upgrading transport services.

EBRD expects to seek opportunities to provide support for private sector competitiveness, to promote a sustainable supply of energy and to enhance the quality and efficiency of public service delivery.

In its application to become an EBRD member, the Lebanese authorities said the Bank’s support would play an important role in developing sustainable economic growth in the country by strengthening key sectors of the economy and contributing to reforms.

In addition, the EBRD Board of Governors in May also approved the Bank’s engagement in the West Bank and Gaza for an initial period of five years to support the development of the economy with investments through trust funds.

Economy overview

Lebanon has seen refugees flood across its border to escape the war in Syria, putting a heavy strain on resources in a country already struggling to overcome internal divisions and long periods of political paralysis.

According to the World Bank: ” Up to 1.5 million Syrians, about the 25% of the Lebanese population, have taken refuge in Lebanon since the Syrian conflict started in March 2011. This has strained Lebanon’s public finances, service delivery, and the environment. The crisis is expected to worsen poverty incidence among Lebanese as well as widen income inequality. In particular, it is estimated that as a result of the Syrian crisis, some 200,000 additional Lebanese have been pushed into poverty, adding to the erstwhile 1 million poor. An additional 250,000 to 300,000 Lebanese citizens are estimated to have become unemployed, most of them unskilled youth.

Within this challenging environment, GDP growth in Lebanon in 2016 is estimated to have undergone a slight acceleration to reach an estimated 1.8 percent, compared to 1.3 percent in 2015. The acceleration was driven by an improvement in the real estate sector and an increased number of tourist arrivals. Nonetheless, economic activity remains well below potential, inhibited by decidedly volatile geopolitics and security conditions.

The deflationary trend has reversed in 2016, reaching -0.8 percent, compared to -3.7 percent in 2015. The fiscal deficit continued to widen in 2016 to reach 10 percent of GDP, primarily due to a growth in expenditures outpacing revenues. Public finances are structurally weak and worsening, and in urgent need of reforms. Public debt continued to rise (157.5% of GDP at end-2016), due to low growth and a relatively high cost of debt financing.”

EBRD

The European Bank for Reconstruction and Development (EBRD) was established to help build a new, post-Cold War era in Central and Eastern Europe. The EBRD is committed to furthering progress towards ‘market-oriented economies and the promotion of private and entrepreneurial initiative’. This has been its guiding principle since its creation at the beginning of the 1990s and, new challenges and the welcoming of new countries to the EBRD world notwithstanding, will continue to be its mission in years to come.

The EBRD serves the interests of all its shareholders - 68 countries from five continents plus the European Union and the European Investment Bank - not just those countries which receive its investments (€9.4 billion in 2016).

The EBRD offers financial products tailored to each client. Prospective clients have to demonstrate that their proposed project or business meets the minimum requirements to be eligible to be considered for EBRD involvement. 

 EBRD financing for private sector projects generally ranges from $5 million to $250 million, in the form of loans or equity. The average EBRD investment is $25 million. Smaller projects may be financed through financial intermediaries or through special programmes for smaller direct investments in the less advanced countries.

 The forms of direct financing we offer are: loans, equity investments and guarantees to promote trade.

Under its Small Business Initiative, the EBRD also helps small and medium-sized businesses access the business advice they need to grow, succeed, then grow again, becoming genuine catalysts for their local economies and region.

 

Strategia & Sviluppo Consultants
EBRD Advisors