BEIRUT, April 15: Lebanon will seek support from the United States to hold an international donor conference to help the Arab state curb its public debt of around $36 billion and boost growth, Prime Minister Fouad Siniora said on Saturday.
The government has vowed to present a package of economic reforms to potential lenders at the conference, including the long-delayed privatisation of public assets and measures to curb fiscal spending and increase revenues.
Siniora, who will meet President George W. Bush on Tuesday in Washington, said the U.S. support was key to help Lebanon resuscitate its economy, hit after last year’s killing of former prime minister and billionaire Rafik al-Hariri.
This will help Lebanon overcome the economic difficulties that have been accumulating over the past 30 years, he told Reuters in an interview at the government’s house in central Beirut, built in 1849 during the Ottoman occupation and restored in the 1990s.
The United States is a key player in this respect and has a convincing power on several friendly nations to contribute. Lebanon has waited (on the reforms) for so long and the cost and the losses are rising, he said.
Political wrangling among rival factions over the past several months has delayed the conference, which was expected to take place in Beirut late in 2005.
Lebanon’s public debt, mostly accumulated after the 1975-1990 civil war, is worth almost twice the country’s gross domestic product — one of the heftiest in the world.
The country began restructuring its debt after an aid conference in 2002 resulted in about $4 billion in cheaper loans, helping it to avert a financial crisis, but political squabbling blocked the needed subsequent reforms.
Siniora said Lebanon was banking on international support to curb the budget deficit and the debt-to-GDP ratio in order to achieve a sustained annual economic growth of about 5 or 6 percent over the next years from around one per cent in 2005.
Central Bank Governor Riad Salameh told Reuters in October Lebanon was expected to attract around $4 billion in cheap loans at the conference to replace more expensive borrowings.
Siniora, an ex-top banker who served as finance minister during most of the post-war years, said Lebanon will call the aid meeting once the country’s rival factions reach a consensus on the reform plans be it in a week or several weeks.
These reforms are essential and we all have to discuss them and reach a consensus because they will take an exceptional effort and sacrifices from us all, he said.
The government plan envisages increases in value added tax, the introduction of a new flat income tax and privatisation of the profitable land and mobile telephone networks.
Siniora is a leading member of a coalition which dominates the parliament and cabinet, but Lebanon’s delicate sectarian political and social structure makes reaching a consensus essential to pass key decisions.
The opposition has already criticised the planned reforms, saying they would place more burden on ordinary Lebanese but Siniora was optimistic that an agreement was within reach.
Low-income classes should not shoulder the burden of the changes. This is an effort that we all should share...so that Lebanon does not become the country of the lost chances.—Reuters
