Cablegate: Imf Proposes Including Remittances in Gdp Calculations

VZCZCXRO8208
RR RUEHBC RUEHDE RUEHDH RUEHKUK RUEHROV
DE RUEHLB #1118 2860721
ZNR UUUUU ZZH
R 130721Z OCT 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5873
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS BEIRUT 001118

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN KFLU PGOV LE
SUBJECT: IMF PROPOSES INCLUDING REMITTANCES IN GDP CALCULATIONS
(ECONOMIC WEEK IN REVIEW, OCTOBER 5 - 11, 2009)

CONTENTS
--------

-- IMF PROPOSES INCLUDING REMITTANCES IN GDP CALCULATIONS
-- CENTRAL BANK GOVERNOR: BANK DEPOSITS REACH $92 BILLION
-- LEBANON RECORDS BEST IMPROVEMENT IN COUNTRY RISK WORLDWIDE
-- SWINE FLU VACCINES TO BE AVAILABLE SOON

IMF PROPOSES INCLUDING
REMITTANCES IN GDP CALCULATIONS
-------------------------------

1. (U) An IMF working paper has suggested adding remittances to
Lebanese GDP as a way to create a more accurate representation of
debt sustainability. With gross remittance inflows to Lebanon
estimated at around 20% percent of GDP in 2008 (making the country
one of the largest recipients of remittances as a share of GDP
worldwide), adding remittances would drop the public debt to GDP
ratio. Lebanon's gross public debt reached $47.8 billion at the end
of June 2009. Meanwhile, Central Bank of Lebanon (CBL) Governor
Riad Salameh recently estimated GDP at $33 billion, and noted that
if remittances are added, GDP would reach $38 billion.

CENTRAL BANK GOVERNOR: BANK
DEPOSITS REACH $92 BILLION
---------------------------

2. (U) Central Bank of Lebanon (CBL) Governor Riad Salameh publicly
noted that commercial banks have been able to absorb around $14
billion in deposits in the first eight months of 2009. With this,
deposits stand at $92 billion and $22 billion in Lebanese banks
operating overseas, he said. Salameh expected interest rates on
Lebanese pound deposits and treasury bills either to fall or remain
stable, and noted that Lebanon will not have any problem refinancing
the public debt in 2009-2010 thanks to high liquidity in the market.

3. (U) Last month, prominent local economists publicly characterized
increased deposits as a double-edged sword for local banks. As
depositors continue to convert dollar deposits to Lebanese pounds to
benefit from higher pound interest rates, bank profits will likely
take a hit in 2009, while new investment opportunities are harder to
find in the aftermath of the global economic crisis.

LEBANON RECORDS BEST IMPROVEMENT
IN COUNTRY RISK WORLDWIDE
--------------------------------

4. (U) Lebanon ranked 80th out of 186 countries worldwide in
Euromoney magazine's semi-annual country risk survey, up 22 places
from the previous survey in March. On a year-to-year basis,
Lebanon's rank rose by 54 spots, making Lebanon's improvement the
best worldwide in the past year. The survey attributed the
improvement to the country's resilience to the economic crisis.

5. (U) The survey assesses country risk using nine categories:
political risk, economic performance, debt indicators, debt in
default, credit ratings, access to bank finance, access to
short-term finance, access to capital markets, and discount on
forfeiting. Lebanon's score rose in six categories and remained
unchanged in terms of debt indicators, debt in default, and access
to bank finance.

SWINE FLU VACCINES
TO BE AVAILABLE SOON
--------------------

6. (U) Minister of Public Health Mohammad Khalifeh publicly noted
that swine flu vaccines will be available next month. The GOL will
not make the vaccination compulsory, as long as the cases are not
life-threatening, he said. With the start of the school year, the
Ministry of Public Health (MOPH), in collaboration with the Ministry
of Education, has launched an extensive awareness campaign on how to
handle the flu. In early September, the MOPH announced it will no
longer track the number of people diagnosed with the flu, following
the lead of other countries worldwide.

SISON

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