Oman experiences a 17.6% increase in Foreign Direct Investment, reaching $69.3 billion by Q3 2024. In Lebanon, a new government led by Prime Minister Nawaf Salam seeks to address a prolonged economic crisis marked by severe financial mismanagement. The need for structural reforms, transparency, and accountability is emphasized, as political disputes hinder recovery efforts. Major challenges include Hezbollah’s influence and securing international support, with experts advocating for significant changes in governance and economic strategy.
Oman’s Foreign Direct Investment (FDI) has increased significantly, with a 17.6% growth over the past five years, reaching $69.3 billion by the third quarter of 2024. This impressive growth highlights Oman’s potential as an attractive destination for international investors, showcasing the country’s commitment to economic development and diversification.
In Lebanon, a new government under Prime Minister Nawaf Salam faces immense challenges as it seeks to reverse the country’s economic collapse. The nation has been grappling with a severe financial crisis since 2019, which resulted in an $80 billion deficit in the banking sector and a depreciation of the national currency by 90%.
Political disputes have stalled efforts for debt restructuring, hindering recovery. The International Monetary Fund (IMF) has deemed Lebanon’s economic reforms insufficient to qualify for financial assistance, leading to a reliance on dwindling foreign reserves. Salam has expressed his determination to enact vital reforms and restore trust in the government alongside President Joseph Aoun.
Fadi Nicholas Nassar from the Middle East Institute emphasized the urgency of structural reforms in Lebanon, citing the devastation caused by the ongoing financial collapse, the Beirut port explosion, and domestic conflict. He stated, “Trust, though quickly lost, is not so easily restored.”
To move forward, economist Jassem Ajaka highlighted the importance of transparency and independent audits of the financial sector, a process not undertaken since 2003. Such measures are critical for ensuring fair distribution of financial losses and rebuilding depositor confidence.
Ralph Baydoun also noted that Lebanon’s capacity to attract economic aid and investment is closely linked to geopolitical dynamics, stressing that decisive reforms are needed to regain international credibility. He pointed out that strong anti-money laundering initiatives and financial audits are crucial for Lebanon to reengage with the global financial system.
The political deadlock over loss distribution among banks has further exacerbated the financial burden on depositors. Ajaka proposed restructuring the banking sector through mergers and asset sales. This restructuring should prioritize the interests of depositors while determining each bank’s financial standing before making decisions.
Advisor Mohammad Farida put forward a phased recovery road map for restoring depositors’ savings while ensuring accountability for financial mismanagement. He cautioned that delays in implementing reforms will further jeopardize the chances of full recovery for depositors, stressing the need for immediate payouts for small depositors and gradual restoration for larger accounts.
The Depositors’ Union has expressed conditional support for reform initiatives, demanding that any restructuring does not displace public assets. Farida asserted that accountability is crucial, stating, “There cannot be a regain of trust in the system if those responsible for this crisis are not held accountable.”
Hezbollah’s persistent influence remains a major obstacle to recovery, deterring foreign investment and hindering Lebanon’s full reintegration into the regional economy. Nassar posited that full sovereignty must be restored by dismantling Hezbollah’s political dominance, advocating for governance based on competency rather than patronage.
Baydoun mentioned that the decreasing influence of Iran offers Lebanon a chance to establish stronger ties with Western nations and to garner international support. This could facilitate the reconstruction effort, which has been placed at $10 billion due to the significant damages inflicted by the Hezbollah-Israel conflict and other crises.
President Aoun reaffirmed the government’s commitment to reforms, underscoring the priority of drafting necessary legislation for recovery initiatives. However, with the skepticism of donors and the requirement for political stability, the task ahead for Lebanon’s government is monumental.
Looking forward, Ajaka noted that attracting Foreign Direct Investments (FDIs) hinges on establishing a stable political environment and instituting an independent judiciary to combat corruption. Lebanon possesses potential for high returns on investments, provided that these conditions are met.
Foreign Minister Faisal bin Farhan emphasized the necessity for tangible reforms, stating, “We will need to see real action, real reform, and a commitment to a Lebanon that is looking to the future, not to the past.”
Baydoun highlighted Lebanon’s exclusion from key global supply chains, indicating that it must actively seek integration and position itself as a crucial trade hub. If Lebanon fails to leverage its geographical position, it risks permanent marginalization in regional and global markets.
Energy policy expert Laury Haytayan called for private sector investment in renewable energy, stating there is a longstanding need for regulatory reforms in the electricity sector. She warned against overestimating the economic benefits of Lebanon’s offshore gas potential, calling for structural changes in the electricity sector instead.
Implementing necessary reforms will require parliamentary approval and legal updates, as emphasized by Farida. He noted, “It is still premature to judge whether this administration will produce a new comprehensive plan for the financial gap.” The synchronization of legislative frameworks will be crucial for Lebanon’s successful economic recovery.
In summary, Lebanon’s new government faces monumental challenges in navigating its economic crisis marked by severe financial mismanagement and external pressures. The proposed reforms require transparency, accountability, and a commitment to dismantling entrenched political influences. As the nation strives to rebuild trust and attract foreign investments, the path to recovery remains fraught with difficulties, demanding urgent and decisive actions from its leadership. Without a credible strategy, Lebanon risks further economic deterioration and marginalization within the global finance system.
Original Source: www.arabnews.com
