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It's now or never for Lebanon to embark on economic reforms

It is no secret that the Lebanese economy is in the doldrums but this sinking 'Titanic' is taking everyone down with it.

Never in its history has Lebanon faced an economic situation as catastrophic as today. The situation is so bad that the Lebanese Prime Minister Saad Hariri last week declared a state of economic emergency after a meeting between his cabinet and leaders representing all the religious communities. The meeting discussed the country's economic and financial crisis and has proposed a few measures.
It is no secret that the Lebanese economy is in the doldrums but this sinking 'Titanic' is taking everyone down with it.
Recently, Fitch Ratings, which is one of the 'big three' credit rating agencies in the world, downgraded Lebanon's rating from B- to CCC. The downgrade has added pressure on the Lebanese government to take urgent measures to save the economy from further decline.
Also, a recent report from the Institute of International Finance (IIF) noted that Lebanon could enter recession in 2019. The Washington D.C.-based firm forecasts a decline of 0.6 per cent in Lebanon's annual economic growth.
An economic recession is defined as a contraction of economic activity for at least two consecutive quarters. Persistently subdued activity in the Lebanese economy could further exacerbate the budget deficit and also widen the public deficit. The IIF report estimates that public deficit could reach 151.8 per cent of GDP this year. Lebanon has amassed so much debt that it has become the world's third most indebted country.
There are many factors that are responsible for the economic crisis that plagues the country. It includes pervasive corruption, lack of transparency in public dealings, lack of regular national budget which allowed significant slippages in public spending.
Also, Lebanon lacks the reforms needed to keep up with the changing nature of the economy. The present set of laws are outdated and do not portend well for the economy.
On another side, the presence of Hezbollah in a powerful position in Lebanon hasn't helped much. Its military role and interference in countries such as Syria have led to the isolation of Lebanon. Many countries from the Gulf have consequently cut off their financial support to Lebanon which has worsened the situation.
Nevertheless, the Lebanese government can still save the situation and implement projects that are funded by the international community grants and loans.
Last year, the advisors of the global consulting firm McKinsey & Co drew out a wide vision for the Lebanese economy, advising the leaders on how the country can become a hub for wealth-management and investment banking, and emerge as a provider of medicinal cannabis.
The consulting firm's report offers a roadmap to Lebanon, which should be considered since the international community has promised the small country $11 billion in grant and soft loans in April.
The plan offers solutions such as getting involved in the reconstruction of both Iraq and Syria. The Syrian reconstruction market represents great opportunity. It is worth more than $300 billion, and offers more opportunities in terms of reconstruction of houses for the thousands of refugees who will return to Syria.
Lebanon can be a vital player in Syria's reconstruction, and allow use of its port during the process. Moreover, Lebanon is connected to Syria by road and also has a maritime route through the ports of Tripoli and Beirut. It can be a base for companies to operate from also be a major supplier of labour.
The Lebanese were worried amid rumours that the international community would withdraw its proposed donations. But last week, the French inter-ministerial delegate for the Mediterranean, Pierre Duquesne, who is in charge of following up on the implementation of the CEDRE conference resolutions, reassured everyone at a press conference in Lebanon that none of the donors has decided to block funds that are designated for the country.
Despite all its economic problems, the world knows that Lebanon with its strategic location has the potential to pay back its loans, provided it ensures reforms and keeps corruption in check.
There is hope for Lebanon only if the government acts fast and starts implementing projects. The country can no longer afford to not take swift action. There are still some officials who are trying in unscrupulous way to benefit from the current situation, but they should not be allowed to succeed.
Christiane Waked is a political analyst based in Beirut