The Institute of International Finance indicated that the Lebanese economy is stagnating, as the lack of reforms and the delays in the formation of a new Cabinet have dampened private consumption and investment. It added that delays in forming a new Cabinet are hindering the country's access to the $11.2bn in concessional loans and grants that the international community pledged at the CEDRE conference in April 2018. As such, it forecast real GDP growth to decelerate from 1.8% in 2017 to 1.3% in 2018, amid the ongoing political deadlock and absence of reforms. It anticipated that Lebanon's potential economic growth could increase from 2.7% in 2017 to 5% by 2023, in case authorities successfully implement the infrastructure projects under the Capital Investment Program that aims to upgrade the country's infrastructure. 

Further, the IIF indicated that inflationary pressure has increased due to the sharp increase in public-sector wages, the rise in global oil prices, last year's tax increases on consumption, income and profits, as well as the growth in global food prices. However, it expected this pressure to moderate, with the average inflation rate declining from 5.7% in 2018 to 3.8% in 2019. In addition, it considered that monetary policy in Lebanon should continue to be tight in order to reduce inflationary pressure, support the currency peg to the US dollar and ensure adequate inflows of non-resident deposits. Further, it expected confidence in the peg of the Lebanese pound to the US dollar to remain strong, supported by Banque du Liban's elevated assets in foreign currency of $43.6bn and gold reserves of about $11.1bn at end-August 2018.

In parallel, the IIF pointed out that Lebanon continues to face wide fiscal and current account deficits. It forecast the fiscal deficit to widen from 7% of GDP in 2017 to 9.7% of GDP in 2018, as the higher public-sector wage bill and significant increase in other current spending, due to the Parliamentary elections in May 2018, will more than offset additional revenues that may be raised from the tax increases that the government imposed last year. As such, it projected the public debt level to grow from 147.7% of GDP at the end of 2017 to 150.7% of GDP at end-2018 and 151.4% of GDP at end-2019. But it noted that the macroeconomic risks from the elevated debt level are partially offset by support from the highly liquid banking system, which continues to attract adequate deposits from the Lebanese Diaspora. 

The IIF considered that the government needs to proceed with serious fiscal adjustments and structural reforms in order to narrow the fiscal deficit, decrease the public debt level, and reduce the reliance on foreign inflows to cover the fiscal financing needs. It estimated that a primary surplus of more than 2.7% of GDP and a real GDP growth of at least 3% annually would help put the public debt level on a firm downward trajectory.