Cash inflows make up ten percent of GDP

IMF report shows remittances affect consumption but not investment

Net remittances coming in to the country between 2007 and 2011 represented around ten percent of GDP, according to a working paper published in April by the International Monetary Fund (IMF). 

According to the study, remittances influence private demand, which in turn affects government tax revenue. The study found that remittances affected private consumption and imports but not domestic investment. 

It found that Lebanon, along with other developing MENA countries, is vulnerable to a slowdown of economic activity in countries from where remittances are sent. To measure the fiscal impact of this vulnerability, the study estimated the percentage change in the primary fiscal balance in remittance recipients (between 2008 and 2009) due to the financial slowdown in 2009, and then the recovery in 2010.

The impact represented more than a 20 percent change in the country's primary fiscal balance over those years. Remittances grew by 12.38 percent in 2010 from the previous year. In 2009, around 70 percent of remittances were from the GCC, ten percent were from North America. 

The World Bank had estimated remittances coming into Lebanon in 2009, at $7 billion and in 2010, at $8 billion.

Reported by Hanadi Chami