Can privatization save Lebanon's economy?
Lebanese President Michel Sleiman highlighted Saturday the need to privatize some sectors of the Lebanese economy to improve productivity and reduce the burden on citizens by minimizing the costs of services.
“We need to think seriously about re-studying subsidies policies in addition to adopting the right privatization methods in some sectors to improve productivity and reduce the burden for citizens,” he said.
“Moreover, we need to hasten the adoption of the partnership law between the private and the public sectors while setting the adequate framework for directing foreign and local investments toward services sectors instead of focusing only on bank deposits and the construction sector,” he added.
Sleiman’s remarks came during the Lebanon Economic Forum which was organized by Al Iktissad Wal Aamal Group at the Four Seasons Hotel in Beirut.
Ministers of key sectors, government officials, business and investment leaders, and experts from Lebanon, Arab and neighboring countries gathered to discuss the existing and upcoming challenges and prospects facing the economy and measures that needed to be adopted in the coming period.
Sleiman emphasized the need to adopt sound and bold economic policies with the introduction of comprehensive reforms that aim at increasing revenues and rationalizing expenditures.
“We should not stick to old economic models which have caused a waste of our natural and human resources in the past,” he said.
Sleiman believes the main tool to tackle the economy’s weakness is in preparing solid visionary budgets that would lead to several sectors-based policies complementary to the fiscal system and the expenditure structure.
“Such a budget, if implemented, would be the main platform for establishing macroeconomic policies,” he said.
“This is why it is highly important to adopt the legal text that would require an annual revision of the economic situation with the support of the private sector in order to establish a sound foundation for the budget and the management of the public debt.”
In his speech Sleiman placed a great importance on the oil and gas exploration saying it would open new horizons that could strengthen and consolidate the Lebanese economy and secure citizens’ welfare.
“The economic growth must be coupled with the implementation of social development policies that we have previously adopted in addition to following up on the development of educational systems and the introduction of administrative reforms that go hand in hand with these steps,” he added.
For his part, Mohamed Choucair, president of the Chamber of Commerce, Agriculture and Industry, urged Sleiman to exert further efforts to ensure the finalization of the government’s ministerial statement and the required vote of confidence in Parliament which would enable the state to start working seriously on the challenges facing business owners.
“The Lebanese economy is in dire need of special attention and we are no longer able to carry the burden and the crises of the region,” he said.
“Today we are in dire need of an economic Baabda [Palace] declaration that recovers trust in our economy, just like you have recovered the trust of the world and the Lebanese in Lebanon following the Baabda Declaration.”
Meanwhile, Nabil Itani, chairman of the Investment Development Authority of Lebanon (IDAL), said that the political and security crisis in the region weighted negatively on the Foreign Direct Investments (FDIs) in this area.
“ Lebanon is part of the region and it has been affected by the crisis but to a lesser extent,” he said.
“It is true that there were some negative indicators but what is also true is that Lebanon was able to achieve many positive results on which we can build such as the increase in FDIs by 8 percent in 2012 and the surge in exports by 2.6 percent in 2013 in addition to a hike in bank deposits by 5 percent and 11 percent in Lebanese pound and US dollars respectively.”
For his part, Francois Bassil, president of the Association of Banks, highlighted the critical economic situation prevailing in Lebanon saying that the difficulties facing the country were rooted in three main issues.
“One main issue is the weakness of growth that needs local and foreign investments which are currently absent and downsized,” he said.
He noted that another very serious issue was the chaos created by the flow of the huge number of Syrian refugees to Lebanon and their employment in the Lebanese market.
He also stressed the need to fill the vacant posts in the public sector according to a specific set of mechanisms.
“This should only take place according to a proper set of mechanisms contrary to what some people want us to get back to which is the despicable quotas and recruitment based on favoritism,” he said.
On the other hand, Bassil praised the resilience of the Lebanese banking sector saying that bank loans had increased by 9 percent in the past year.
Adnan Kassar, president of the General Union of Chambers of Commerce, Industry and Agriculture for Arab Countries, said that Lebanon was suffering as a result of the Syrian crisis and had paid a major price in terms of stability.
“According to the World Bank’s study, Lebanon has lost $7.5 billion, not to mention the great waves of Syrian refugees whose numbers have reached one-third of Lebanon’s population,” he said.
“The internal Lebanese crisis has aggravated the situation and made us suffer further, especially that investors are no longer attracted to Lebanon,” he added.
Raouf Abou Zaki, CEO of Al Iktissad Wal Aamal Group, highlighted the importance of holding the forum in the current circumstances saying that Arab countries need to follow up on developments in the region and discuss ways to face challenges emerging from the difficult situation prevailing in the area.
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