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The Lebanese Republic is a small, mostly mountainous country in the Western Asia, on the eastern shore of the Mediterranean Sea. It is bordered by Syria to the north and east, and Israel to the south. Due to its sectarian diversity, Lebanon follows a special political system, known as confessionalism, to distribute power as evenly as possible among different sects.

The flag of Lebanon features a cedar in green against a white backdrop, bounded by two horizontal red stripes along the top and bottom. A combination of beautiful climate, many historic landmarks and world Heritage sites continues to attract large numbers of tourists to Lebanon annually, in spite of its political instability. In addition, Lebanon's strict financial secrecy and capitalist economy-unique in its area-have given it significant economic status among Arab countries. The thriving tourism and banking activities have naturally made the services sector the most important pillar of the Lebanese economy.

Lebanon's lack of raw material for industry and its complete dependency on Arab countries for oil have made it difficult for the Lebanese to engage in significant industrial activity. As such, industry in Lebanon is mainly limited to small businesses concerned with reassembling and packaging imported parts.

Lebanon is ideally suited for agricultural activities in terms of water availability and soil fertility, as it possesses the highest proportion of cultivable land in the Arab world. Ironically though, Lebanon does not have a large agricultural sector.

The population in Lebanon was estimated at 3,874,050 in July 2006. There are approximately 16 million people of Lebanese descent spread all over the world, Brazil having the largest Lebanese community aboard .Argentina; Australia, Canada, Colombo, Mexico and Venezuela have the large Lebanese communities. Lebanon's officially languages are Arabic and French. Armenian and English are also widely spoken and understood.

Lebanon is a multi-confessional nation. Despite its population size, it hosts more than 18 distinct religious officially recognized sects. No accurate numbers on the distribution of the population per sect are available since the only census was conducted.

Lebanon lacks a social development vision for the country. Whereas some progress has been made to understand and measure poverty, through partial surveys and social mappings, the country still lacks a national poverty line and poverty profile, as well as a poverty strategy and poverty reduction targets. Recently, the two national surveys that were conducted by the Ministry of Social Affairs and UNDP (1998 and 2006) for the years 1995 and 2004 have produced detailed information on national living conditions, including on the poor.

The main economic challenge of the government is to address fiscal imbalances, as chronic fiscal deficit and debt continue to threaten macro-economic stability and undermine growth prospects. At the end of 2002, a series of measures to address the issue of the public debt were elaborated and presented to a donor's conference, Paris II. The financial inflows that resulted from the conference coupled with two schemes with the central bank and Lebanese commercial banks represented a package of over $10 billion that was mainly used to replace part of the high interest short-term debt with low interest long maturity debt. As a consequence, market sentiment improved, interest rates went down and the Lebanese economy started to recover in 2003 and 2004, with real GDP growth of 3 and 5 percent respectively.

However, despite these positive developments, the full implementation of the reform measures under Paris II, for example privatization and securitization, was undermined and obstructed because of internal political divisions exacerbated in an election year. As a result, policy outcomes fell short of the government's Paris II objectives.
During the first half of 2005, the economy was hit by the adverse repercussions stemming from the assassination of the ex-Prime Minister Rafik Hariri and the events that followed. Moreover, the war by Israel against Lebanon in July 2006 was devastating to the economy. A very promising tourist season and strongly resurgent economic activity were interrupted, employment opportunities reduced and unemployment increased. The direct and indirect cost of the war has been officially estimated at $5 billion, or 22% of GDP. The expected 2006 GDP growth rate of 6% was directly compromised during the war, experiencing an 11-point decline to -5%. Around 850 commercial enterprises in the manufacturing and service sectors were destroyed. Public debt rose to the even less tenable level of 180% of GDP. The economic impact, however, in terms of reduced economic activity and employment opportunities, had a greater burden falling on the most vulnerable groups in society such as small scale entrepreneurs, women-headed households and the poor.

In response to the July War, Sweden hosted the Stockholm Conference for Lebanon's Early Recovery. The conference provided pledges in financial assistance of approximately $ 1 billion. In January 2007, the Lebanese government had adopted a comprehensive economic and social reform program that was presented at the Paris III conference. The Paris III meeting was successful, with pledges of $7.6 billion including $0.8 billion in grants and $2.4 billion in soft loans, bringing the total grant element to $2.4 billion, or about 11% of GDP, which is substantial.

 

  1. The HDI for Lebanon is (0.772) which gives Lebanon a rank of 88th out of 177 countries based on HDI2007.
  2. Lebanon's development rank is ten steps lower than its rank in 2006(78 out of 177 countries) Lebanon has dropped ten places in rank and 0.002 in value between last year's report and this year's report.
  3. HPI-1 value for Lebanon,8.5 ranks 18th among 108 developing countries for which the index has been calculated
  4. Lebanon has been in the medium human development rank all through 2000's
  5. Lebanon's GDI value, 0.759 should be compared to its HDI value of 0.772. Its GDI value is 98.2% of its HDI value. Out of the 156 countries with both HDI and GDI values,117 countries have a better ratio than Lebanon's
  6. Based on 2005 data