Lebanon central bank chief opposes devaluation, wants reforms
Lebanon's central bank chief said Thursday he opposed a devaluation of the Lebanese pound, while he favored structural reforms aimed at reducing the country's heavy public and private debt.
In an interview with AFP, Bank of Lebanon Governor Riad Salame said the "pound has been stable for seven years.
"Lebanon has no economic interest in using a devaluation of the pound. Given that social stability presupposes maintaining the purchasing power of the pound, those countries dealing with Lebanon also have an interest in that," he said.
The pound is currently trading at around 1,500 to the dollar.
Lebanon's public debt is expected to surpass $24 billion, or 140 percent of gross domestic product, by the end of this year, Salame said. Private debt, for which Salame gave no figure, represents 88 percent of GDP.
Structural reforms, including a privatization program, notably in the electricity sector, will help to reduce both public and private debt, he said.
"Interest rates will decline thanks to the dynamism brought about by the economic reforms," the central bank chief said.
Reducing debt in the privat sector will require "a program of enterprise capitalization. Lebanese companies should begin to organize themselves by opening up their capital to share issues."
Lebanese President Emile Lahoud is to begin conslutations with parliament on the formation of a new government on October 17, following recent legislative elections in which former prime minister Rafiq Hariri and his allies made a strong showing.
Parliamentary Speaker Nabih Berri last week called for the formation of a government of national unity in order to take on the challenge of turning around the struggling economy.
And this week, outgoing Prime Minister Salim Hoss, who lost his parliamentary seat in the elections, did an about-face from election campaign accusations that Hariri had driven the country into debt during his 1992-1998 tenure and announced his support for his erstwhile rival.
Salame said that the "formation of a representative government would create a climate of confidence favorable to the economy."
According to the most recent report from the private bank, Audi, Lebanese economic growth was negative during the first half of 2000.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)