Lebanon is seeking $10-$12 billion in infrastructure investment from the international community over the next seven years to cope with the huge presence of Syrian refugees in the country, Prime Minister Saad Hariri’s adviser on Syrian refugees said Wednesday.
“We estimate that we need around $1.5 billion in investments in infrastructure each year. The Council of Development and Reconstruction is working on a master plan for the needs of Lebanon and we will send this report to the international community, World Bank and other international banks to obtain long-term loans with a 1.4 percent interest only,” Nadim Munla told The Daily Star.
On April 5, representatives from 70 national delegations, major donors and humanitarian and development organizations met in Brussels to raise funds for countries hosting Syrian refugees. At the conference, Hariri urged the international community to finance major infrastructure projects in Lebanon to ease the refugees’ impact.
International donors made a “collective pledge of $6 billion for this year alone,” EU Humanitarian Aid Commissioner Christos Stylianides said during the conference.
Munla described the plan to draw loans and grants for this project as a complete vision for Lebanon over the next seven years.
“It really started at the London conference a year ago with the previous government when the Syrian crisis entered its sixth year. The international community started looking at the crisis not only from a humanitarian angle but also from [the] civilization and development of the host community toward stabilization and development [angle],” he added.
The international community and organizations, Munla said, created a mechanism called the Global Concessional Financing Facility. “The purpose of this facility was to provide long-term concessional loans to the host communities for mainly infrastructure projects,” he explained.
Lebanon has repeatedly called on the U.S., the European Union and Arab states to help it deal with the around 1.5 million Syrian refugees it hosts. Officials have stressed that current infrastructure such as highways, power plants and water facilities were not built to handle an additional 1-2 million people.
Munla said Lebanon hopes to borrow for the next 40 years at 1.4 percent interest – equivalent to the borrowing conditions of poorest countries in the world. “Lebanon is traditionally a middle-income country and not eligible for this type of loan. The donors will contribute some money, multilateral institutions like the World Bank, Islamic Development Bank and European Investment Bank will lend you, let’s say at 3 percent, and they take the difference from the donors. This means that the donors will pay the difference and not Lebanon,” he said.
He added that this is equivalent to about a 65 percent grant of any amount. “In other words, if you borrow $1 million, you put into it at 1.4 percent; you compare it with Lebanon borrowing at 6.5 percent which is the market rate for Lebanon. This is as if you are repaying the $1 million at $300,000. So it has a 65 percent grant element,” Munla said.
He said this soft loan will have very little impact on Lebanon’s public debt. Munla underlined the importance of the program as neither the government nor the public sector has the means to finance such huge infrastructure projects. He said every $1 billion investment can create 50,000 jobs per year, adding: “Unemployment has reached 30 percent among youth, 20 percent for the whole population, and we have balance of payments problem.”
Munla emphasized that this was the vision Hariri took to Brussels.
The adviser also expressed confidence in achieving the goals to raise this amount of money from the international community, adding that the world is aware of the difficulties Lebanon is facing.
By Osama Habib
Copyright © 2021, The Daily Star. All rights reserved.