The power struggle between the Lebanese president, Emile Lahoud and prime minister, Rafic al Hariri is switching to an economic focus as the incumbent president is exerting efforts to promote constitutional changes that would allow him to get at least a three-year extension.
Lahoud said he would press ahead in a cabinet meeting Thursday with a proposal for a huge swap operation involving foreign currency bonds maturing in 2005 and 2006.
The size of the swap is put at some $7.05 billion, or some 25 percent of the debt, which itself represents 185 percent of Lebanon's gross domestic product. Debt servicing accounts for 47 percent of state revenues, Naharnet reported.
Hariri has rejected Lahoud's proposal, considering it as an attempt to seize control over management of the country's finances. Experts also claimed Lahoud's plan was unrealistic due to the country's low credit ratings.
Hariri has been at Lebanon's economic helm since 1992 except for a two-year break when he was removed from government following Lahoud's election in 1998.
He accuses Lahoud, a former army commanding general, of blocking reforms pledged at a conference in Paris during 2003 that secured $4.2 billion in aid from donor states and international institutions.
A Lebanese economic expert was quoted as saying Lahoud's plan was a reaction to a statement made by Hariri last month that Lebanon could hold a third donor conference in Paris in the second half of next year, after having completed reforms needed to put a "final end" to deficit and debt crises.
Under the Paris II accord, Hariri pledged economic reforms in exchange for international donations. But Lahoud eventually managed to block the reforms.
The Hariri government was seeking to gain US$5 billion from privatizations in the telecommunication and electricity domains but these have yet to be implemented, amid opposition from Lahoud. Privatization was an important element in the government's plan to reduce the $33 billion public debt. (Albawaba.com)
© 2004 Mena Report (www.menareport.com )