New IMF alert: the adoption of the new salary scale will increase the cost of living

The IMF completed last July its report on Article IV Consultation with Lebanon and which highlighted the negative implications of the security situation in the region on Lebanon’s economic performance.  The report noted that economic growth in Lebanon dropped from 2.5% in 2012 to 1.5% in 2013 as a result of the degradation of the tourism and real estate sectors.  Economic activity will remain weak in 2014 especially in view of the fact that there are no signs of any solution to the Syrian crisis, underscoring the negative impact of the general situation on unemployment, economic activity and Lebanon’s general financial situation.
The IMF also warned that should the proposed review of the salary scale be adopted in 2014, then it will lead to rising cost of living.  He added that the proposed measures to raise revenues will fail short of financing the proposed salary scale.  The IMF suggested caution in dealing with this matter and urged authorities to take actions that will increase government revenues, ensure efficient collection of taxes as well as increasing taxation outreach base whilst insuring that it remains fair.
Source: Al-Nahar, Al-Safir, Al-Mustaqbal 6 August 2014