In its latest report, the Institute of International Finance (IIF) modified its forecast for the rate of deflation in Lebanon from 9.6 percent, before the outbreak of the Corona virus and the drop in oil prices, to 12.6 percent in 2020 so that Lebanon would face the highest rate of contraction among the countries of the MENA region.
According to the Institute, the repercussions of declining oil prices globally to the half will be positive for Lebanon, as the import bill, of which oil constitutes about 20 percent will decrease and will reduce the balance of payments deficit. Also, the financial deficit can be reduced due to the decrease in treasury transfers to the EDL to less than half, with oil prices falling by about 50 percent.
The institute revealed that the financial savings that the treasury will achieve as a result of declining transfers to the EDL, will fill part of the decline in state revenues as a result of the sharp contraction expected this year, which will lead to a decline in tax revenues, customs fees, and other government revenue.
In terms of balance of payments, the IIF announced that the positive impacts of declining the import bill as a result of the economic contraction and the decline in oil prices will be offset by a decrease in the export bill due to the contraction in all countries to which Lebanon is exporting, and therefore, the positivity of the decline in oil prices will be erased by the repercussions of the global contraction.
The source (Al-Jumhuriya Newspaper-Lebanon, Edited)
