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News Lebanon Hires McKinsey to Help Revamp the Economy

Jo

Administrator
Master Penguin
#1
Lebanon is hiring management consulting firm McKinsey & Co. to help restructure an economy that’s overly reliant on remittances and banking, and grappling with high unemployment, Economy and Trade Minister Raed Khoury said.

The six-month agreement with McKinsey will be signed by the end of this week and the company will start work next week with various ministries and economic bodies to formulate a new economic vision for the Arab world’s most indebted nation, Khoury said in an interview at his office in Beirut on Monday.

“The government has been historically nearly absent in putting policies and procedures to do that,” said the former Barclays Wealth banker and founder of Cedrus Invest Bank. “The first thing we want to do is to identify our economic identity and then go to more specific things.”

With at least three times as many Lebanese living abroad than in Lebanon, the country has been sustained by remittances that have kept flowing in, especially from Lebanese workers in Gulf and African countries.

Banks use the money to buy government debt, which stands at 150 percent of economic output, according to Khoury. That is one of the world’s highest ratios, along with Japan and Greece.

Record Reserves

With foreign reserves at a record $43 billion, the Lebanese currency has been able to survive the political storms that have at various times left Lebanon without a president or prime minister, and the influx of 1.5 million Syrian refugees who have strained its resources.

But this model is “becoming very risky” and no longer sustainable, Khoury said, predicting that if nothing is done, the debt-to-GDP ratio will go as high as 170 percent in the next few years. He said Lebanon should aspire to emulate the economy of Singapore, another small country with many ethnic groups.

Lebanon’s governance has suffered from the legacy of the 1975-1990 civil war, and the country didn’t have a budget for 12 years until parliament passed one in 2017. Even now, with discussions under way over the new budget, not much thought is being given to the impact that decisions, such as imposing taxes, will have on various sectors, he said.

“We’re doing the budget for 2018, you think there is a mentality of a 3-year, 5-year, 10-year plan behind it? Zero,” he said. “It’s not chaos, it’s a culture.”

‘Tricky’

David Butter, associate fellow at Chatham House in London, said such strategic plans “might not do any harm, but in the case of Lebanon it’s a bit more tricky.” McKinsey will have to analyze and quantify various areas including services, financial flows and parallel economies such as the one controlled by the Iranian-backed Hezbollah group, which are hard to quantify, he said.

“You have a lot of gray areas which might be difficult to put into the context of some sort of a strategic plan,” Butter added.

The minister also said overall unemployment in 2014 stood at 24 percent, with rising youth unemployment exceeding 35 percent, the last year for which figures are available at the ministry. Lebanon’s trade deficit was $11.77 billion by September 2017, with exports at $2.12 billion and imports at $13.89 billion.

These figures show that Lebanon has no choice but to restructure its economy, said Khoury. “It’s not a luxury anymore,” he said.

Source: Lebanon Hires McKinsey to Help Revamp the Economy
 
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  • Jo

    Administrator
    Master Penguin
    #2
    جنبلاط لتلفزيون المستقبل: من أتى بمؤسسة "ماكنزي" لدراسة وضعنا الاقتصادي "حمار"، ومن يطالب بالتوازن في وظائف ما دون الاولى في الدولة "حمار"
     

    Isabella

    The Queen Of "Bazella"
    Orange Room Supporter
    #3
    جنبلاط لتلفزيون المستقبل: من أتى بمؤسسة "ماكنزي" لدراسة وضعنا الاقتصادي "حمار"، ومن يطالب بالتوازن في وظائف ما دون الاولى في الدولة "حمار"
    What's wrong with asking a consulting firm for help? It's quite clear the Lebanese don't know what the f*** they're doing lol
     

    Libnene Qu7

    Super Ultra Senior Member
    Orange Room Supporter
    #5
    جنبلاط لتلفزيون المستقبل: من أتى بمؤسسة "ماكنزي" لدراسة وضعنا الاقتصادي "حمار"، ومن يطالب بالتوازن في وظائف ما دون الاولى في الدولة "حمار"
    Ma7adan 7mar gheir yili bisaddi2 kalemo.
     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #7
    The day the Christian role was cut/weakened/sidelined in our beloved nation.
    Was the beginning of the end and the abyss for Lebanon as a prosperous , progressive and economically viable nation

    Swiss of the Levant no more


    mnel akher

     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #8
    expect the shia to start saying mackenzey yahoud and they were brought by the tayyar to subvert the moukawama, wa wa wa

    and my favorite, este3mar al ghareb

    while these same shia are lining usa embassy for visas
    and the same jumblat wishing to be a garbage collector in New York
     
    #9
    جنبلاط لتلفزيون المستقبل: من أتى بمؤسسة "ماكنزي" لدراسة وضعنا الاقتصادي "حمار"، ومن يطالب بالتوازن في وظائف ما دون الاولى في الدولة "حمار"
    most major countries resort to private consulting firms to draw medium and long term plans for the economical development.

    el hmar is the one who keeps hampering the efforts to launch new power plants for years and years raising questions about few million dollars when the energy sector in Lebanon is costing the government more than 5 million dollars per day in losses, that's around two billion dollars per year worth of hamraneh.
     

    The Jade

    Well-Known Member
    #10
    Joumblatt is trying to "yitghaddehoun abel ma yit3achou".
    McKinsey will most probably come back with solutions which will hurt him so he's trying to discredit them from day one.

    The move is very good by the economy minister.
    I just hope their recommendations will be applied.
     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #11
    اتهمونا بالمارونية السياسية لأنا كنا عاملين لبنان سويسرا الشرق، ومشيو مع عبد الناصر ضدنا بس ضرط بمصر ومشيو مع فتح لاند وناكوا إخت الوطن وخزقوا وهجروا الناس من بيوتا وصارت فتح جيش السنة بلبنان وطوبزوا بعنجر بالدور ونكحن السوري عا مضاجع نسوانن ومشيو مع الاسرائيلي والسوري و الإيراني وولاية الفقيه والاميركاني بس تا تصير بعبدا مجرد ديكور واستلموا مقدرات لبنان ومن وقت ما اخدوا السلطة بال ٩٠ والسرقة ماشية والنهب ماشي والدين ماشي والخوذقة ماشية والعزل بالادارات ماشي تا صار لبنان دولة مارقة وهني ذاتن الفاسدين والسارقين والمجرمين والحاكمين عملوا عفو عام عن مجرمين ويللي تاهمينو بالعمالة لإسرائيل هني طلعوه من الحبس بس تا يكملوا الديكور، ومشيوا مع السعودية وداعش والنصرة و إيران لأن ضريطن بيشبه ريحتن، وبس وصلت تا ترجّع هيبة الدولة بهددوك بالحرب الأهلية... يا عيب الشوم عالشعب الغاشي يللي ما فهم ولا حس انن عملوا كل هالاشيا وسرقوه من ال ٩١ وبعدو متكل عليهن...
     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #12
    Steamen Beamen


    وبيطلعلك واحد كردي من بداديق تيمورلينغ وصلاح الدين الايوري وجنبو لاد من كتر ما ضاجعوا جنبو السوريين بعنجر بعد ما قتلولوا بيو وسكر عا دمات ٢٨٠ بريء ببمريم ورقص عا صوت اجراس الكنايس يللي هدمها وشرب من سرقات صندوق المهجرين حتى التخمة وصار يفنتر بترول من كوجيكو، وبقلك حمير يللي تعاقدوا مع شركة ماكينزي..
     
    #13
    I am so excited for this and I hope it is fruitfull. We have zero vision. At least Rafiq Hariri had a dream n worked towards acheiving it even if that meant he indebted us and promoted corruption directly or indirectly. The most interesting project in Lebanon has been Solidere down town for a while now, even if they destroyed a lot of our history n stole people's land n real estate. Dubai became what it is because of the aspirations n vision of its leader...

    So how exactly does it work, will they just tell us what feilds to invest in for example, and would they promote us in anyway given Im sure they are well connected? Coz the tough part would be to actually execute their recommendations.

    PS: They might recommend we plant medical hashish :)
     
    Last edited:

    Nonan

    Well-Known Member
    #14
    Joumblatt is trying to "yitghaddehoun abel ma yit3achou".
    McKinsey will most probably come back with solutions which will hurt him so he's trying to discredit them from day one.

    The move is very good by the economy minister.
    I just hope their recommendations will be applied.
    Sorry to be a downer but this will be $5M wasted as it will have zero impact (unless McK is doing this pro-bono). I won’t talk about he value of McK’s work (worth another long discussion) but doing a “vision” for Lebanon will never be followed by any application. It will make for nice glossy slogans but the country has neither the capabilities nor the decision making ability to implement any potential recommendation McK could make.

    It would have been much more helpful for McK (or BCG for that matter) to do a few targeted workshops in key productive areas (energy (green and otherwise), tourism, technology, private sector, labor law, etc.) and then agree to push two / three well defined initiatives.

    Let’s be realistic, unfortunately we’re not Singapore
     
    #15
    Sorry to be a downer but this will be $5M wasted as it will have zero impact (unless McK is doing this pro-bono). I won’t talk about he value of McK’s work (worth another long discussion) but doing a “vision” for Lebanon will never be followed by any application. It will make for nice glossy slogans but the country has neither the capabilities nor the decision making ability to implement any potential recommendation McK could make.

    It would have been much more helpful for McK (or BCG for that matter) to do a few targeted workshops in key productive areas (energy (green and otherwise), tourism, technology, private sector, labor law, etc.) and then agree to push two / three well defined initiatives.

    Let’s be realistic, unfortunately we’re not Singapore
    I fully agree, getting a consulting company (an outsider) to put a strategy for a country is "BS". Those McKinsey (or Booz wich ass got kicked big time in Lebanon) have no operational experience and will be delivering an academical exercice which will end up in the drawers :)
     
    #16
    I fully agree, getting a consulting company (an outsider) to put a strategy for a country is "BS". Those McKinsey (or Booz wich ass got kicked big time in Lebanon) have no operational experience and will be delivering an academical exercice which will end up in the drawers :)
    Putting strategies for countries is at the core of what they do, they did it for KSA
     

    The Jade

    Well-Known Member
    #17
    Sorry to be a downer but this will be $5M wasted as it will have zero impact (unless McK is doing this pro-bono). I won’t talk about he value of McK’s work (worth another long discussion) but doing a “vision” for Lebanon will never be followed by any application. It will make for nice glossy slogans but the country has neither the capabilities nor the decision making ability to implement any potential recommendation McK could make.

    It would have been much more helpful for McK (or BCG for that matter) to do a few targeted workshops in key productive areas (energy (green and otherwise), tourism, technology, private sector, labor law, etc.) and then agree to push two / three well defined initiatives.

    Let’s be realistic, unfortunately we’re not Singapore
    You can also give a thousand workshops but if people don't want to learn or apply what they learned it's just as useless.

    The vision is a start and a good one.
    Workshops, trainings, initiatives, etc definitely have to follow with the state's impulse.

    Moreover, when you do the workshops, etc, based on what strategy do you choose them?
    A vision is a start, the rest is up to the state to decide what to do about it.

    I have little faith they will, but I'm interested in the vision.
     
    #18
    The day the Christian role was cut/weakened/sidelined in our beloved nation.
    Was the beginning of the end and the abyss for Lebanon as a prosperous , progressive and economically viable nation

    Swiss of the Levant no more


    mnel akher

    The lords of Lebanon war should be deported outside of The country like Walid Joumblatt, Nabih berri, Samir Geagea, amine Gemayel, 3assim Kansou, sleymane Franjieh, Najah wakim etc. Then Lebanon will start to be on the right trail.
     
    #19
    Maybe the consulting firm will advise against giving projects to his own firms? Since they do such a good job for very little money
    Consulting folks are people with academic background with insignificant operational background. They are mostly brought to justify management decisions. Let's not treat this topic as viewers of a football game where viewers start cheering for a club, while they have never played serious football in their life
     
    #20
    The day the Christian role was cut/weakened/sidelined in our beloved nation.
    Was the beginning of the end and the abyss for Lebanon as a prosperous , progressive and economically viable nation

    Swiss of the Levant no more


    mnel akher

    Let's not bring religion into
    The McKinsey and Booz guys in the Midlle East would never be hired by McKinsey/Booz for a position in the US or Europe. Those are of lower caliber, that fits the 3rd world region (Saudi, Lebanon, etc..)