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Lebanon risk profile rising sharply

Staff Writer |
Lebanon's risk profile is rising sharply and some of the central bank's tools are becoming less effective, the World Bank said on Tuesday in its autumn Lebanon Economic Monitor report.

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In response, the central bank has beefed up its foreign exchange reserves, lengthened the maturity of deposits and limited available liquidity, the report said.

Almost six months since a parliamentary election in May, Lebanon's politicians are yet to agree a unity government that can get to work on badly needed economic reforms. Politicians have warned of economic crisis unless a government is formed soon.

The country has the world's third largest public debt-to-GDP ratio, stagnant growth and what the International Monetary Fund (IMF) has said are increasing vulnerabilities in its financial system.

Reforms are needed to bring down twin deficits and reduce reliance on central bank operations which the IMF has described as unconventional.

"Fiscal and electricity reforms are highlighted as priorities," the report said.

The formation of a new government and a programme of reforms would also likely unlock more than $11 billion worth of infrastructure investment pledged at a donors' meeting in Paris in April.

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