Beirut, Reuters—Lebanon is considering increasing an 800-million-US-dollar economic stimulus package allocated for this year because most of the funds have already been used up, the central bank governor said on Wednesday.
The war in neighboring Syria, a huge influx of refugees and a domestic political stalemate have hit Lebanon’s economy hard, prompting the central bank to introduce a 1.4-billion-dollar stimulus package in 2013 and the additional aid for this year.
The stimulus packages have comprised low borrowing rates for housing and new projects, including for renewable energy, and extended loan terms for small and medium-sized businesses.
“The funds [for 2014] have been almost used completely, that is why we are looking at increasing that package,” Banque Du Liban Governor Riad Salameh told a conference with the International Monetary Fund in Beirut.
Asked how this year’s final package would compare with 2013, he said: “Maybe it will reach the same level.”
Lebanon’s political stalemate has pushed the central bank into promoting initiatives usually put forward by governments.
Salameh said the stimulus package had accounted for about half of Lebanon’s 2.5 percent annual economic growth last year.
The economy grew by around 8 percent a year in 2007–2010, but growth has been quite sluggish since the start of Syria’s uprising in 2011 and increased domestic political paralysis.
Tourism and construction, two of the small Mediterranean country’s main sources of income, have both suffered, with violence and political uncertainty deterring wealthy Gulf Arab tourists and some investors.
More than a million Syrian refugees have entered Lebanon, whose own population is only four million, and the influx has caused 2.6 billion dollars in direct costs and around double that when including lost opportunities for the economy, Salameh said.
However, there are signs of improvement in the economy, he said, adding that the central bank would make its prediction for 2014 economic growth later in the year.
“It is clear there is a better sentiment in the economy for this year,” he said.
The IMF said in May that Lebanon’s economy would grow by 2 percent in 2014 and by around 4 percent over the medium term.