Lebanese cabinet unveils economic stand

Published December 3rd, 2000 - 02:00 GMT

The new Lebanese cabinet headed by the reinstated prime minister, Rafik Hariri, gave its first clear indication of where it stands economically on Wednesday, when it passed a range of cuts in import duties. According to the Daily Star, in so doing it consciously chose to risk lower short-term income for the treasury in return for long-term incentives for the private sector.  


Passing all the legal hurdles with remarkable speed, the cabinet decree did away with a 3 percent tariff on all imported raw materials that are not found locally, and a 6 percent duty on almost all imported semi-finished goods that are not locally manufactured. All duties on computers and their accessories were lifted. Import duties on components for goods that are produced in Lebanon were cut by 25 percent, and all rates currently above 100 percent reduced to 70 percent. Other imported finished goods, had their tariffs reduced to rates of between 5 and 70 percent from rates of between 10 and 100 percent. ƒnDuties on agricultural produce, cement, tobacco, gas, fuel oil, and automobiles remained unchanged. 


Finance Minister Fouad Siniora declared the government plans to stimulate the economy through a pro-growth policy that would result in GDP growth of 3-5 percent in 2001.The policy is to be implemented primarily through a combination of cutting taxes, lowering tariffs and reducing red tape, as well as by raising expenditures to reduce some obstacles to growth. The government would also spur growth by tapping some of the $450 million in unused low-interest loans from various multilateral institutions. The minister added that any revenues from the sale of state assets next year would be earmarked toward reducing the public debt, according to Lebinvest


Siniora admitted that the planned cuts in tariffs, which generate almost 50 percent of government revenues, would push up Lebanon،¦s already high public. He predicted the fiscal deficit would reach 51 percent of spending by the end of 2000 and would remain at that level or slightly higher next year. The Minister plans to submit to the cabinet an amended budget draft bill for 2001 that would not include any new taxes or figures for the value-added tax.  


According to Lebinvest, he reaffirmed the government،¦s determination to introduce VAT, but said it will not take place before the end of 2001. The government،¦s growth policy will effectively reverse the austerity policies of the Hoss administration that have failed to reduce the deficit or contain the growth of the debt.  


The finance minister also said he was considering further tax cuts on imported goods, and will reassess charges at Beirut port, which are 30-40 percent higher than other ports in the region. Siniora also allowed about 700 consignments of imports that arrived before December 1 and that had yet to be cleared by customs to be charged at the new reduced rates 


Explaining the new economic policy, Siniora said that it was expected to provide for Lebanon،¦s acceptance into one of the major international trading blocs. However, he admitted that the measure would make no dent on the country،¦s fiscal deficit in 2001, which to a large part is a result of the servicing of a $23 billion debt. Siniora denied that outside pressure،Xfrom the European Union or elsewhere،Xwas in any way responsible for the government،¦s decision. 


According to AFP, the recent slashing of Lebanese import duties will facilitate an agreement between Lebanon and the European Union (EU). After meeting Friday with Lebanese Prime Minister Rafiq Hariri, Europe's special envoy in the Middle East, Miguel Angel Moratinos, said "I told the Prime minister about the EU's interest in and support for the courageous measures which have just been taken by the Lebanese government and which will obviously facilitate negotiations between the EU and Lebanon". The EU envoy said he hoped an agreement could be signed very soon.  


Hariri later said that the just-announced cut in import duties was part of a general policy to make Lebanon the primary trade center of the region. He then hinted that that if the import duty cut does not lead to lower prices, the government will adopt other measures designed to promote competition by eliminating exclusivity. On November 11, Hariri told AFP that a partnership with the EU was the first step towards integration in the World Trade Organization and eventually setting up an Arab common market. ،X (Albawaba-MEBG)

© 2000 Mena Report (www.menareport.com)

© 2000 - 2019 Al Bawaba (www.albawaba.com)

You may also like