Lebanon to grow 4 pct, avoids worst of crisis-IMF

WASHINGTON, July 15 (Reuters) - Lebanon's economic growth is likely to reach 4 percent in 2009, half the pace of last year, as the economy remains relatively unaffected by the global financial crisis, the International Monetary Fund on Wednesday.

In an evaluation of Lebanon's performance under an IMF program approved in November 2008, the IMF said Lebanon's large banking sector had felt little impact from the crisis, given its limited exposure to failed foreign banks or wholesale funding markets.

The IMF said that commercial bank deposit inflows, the main funding source for the large government deficit, remained strong.

"Cyclical indicators point to a soft landing of the Lebanese economy in spite of the global financial crisis and recession," the IMF said in its report. "The impact of the global financial crisis on Lebanon has so far been muted."

Lebanon's June 7 parliamentary election resulted in a victory for a coalition led by Saad al-Hariri, a billionaire businessman backed by the United States and Arab countries like Saudi Arabia.

Lebanon's debt-to-GDP ratio is one of the world's highest and the IMF said policies going forward should ensure that the problem is tackled through a lasting and large fiscal adjustment.

It said all efforts by authorities should aim to avoid a fiscal loosening, which would erode market confidence.

"With continued fiscal discipline, the government should be able to obtain the necessary financing from the market during 2009," the IMF said.

The IMF said monetary policy should remain cautious in the near term. (Reporting by Lesley Wroughton)