Hariri Expects Lebanon’s Economy to Grow Three Percent

Published May 26th, 2001 - 02:00 GMT

In his latest defense of the government’s economic record, Lebanese Prime Minister Rafiq Hariri said that he hoped Lebanon would see growth of three percent this year, reported the Daily Star newspaper. 

Addressing a high-powered lunch audience of MPs, bankers and businessmen at the Joseph Khoury Marina in Dbayyeh, Hariri said there were clear signs that the economy was emerging from two years of stagnation. 

The premier said claims that the new government had achieved nothing were "not true," and said that all economic indicators were improving. 

For example, the government ran a budget deficit of 40.7 percent of spending in the first four months of the year, down from 53.1 percent in the same period of 2000. 

"We used to say that the country was in intensive care," the prime minister said. "Now we can say that the country is not in intensive care any more, but it needs physiotherapy." 

Hariri said one of the biggest problems facing the government was the high cost of debt servicing, the largest single spending item in the budget, which is forecast to be about $3 billion this year. 

The $24 billion public debt, about 70 percent of which is financed by local-currency T-bills and the remainder by hard-currency borrowing, carries an average interest rate of 12.5 percent, said the paper.  

Hariri said that the government would save $250 million for every percentage point that this interest rate fell. 

"This is why we’re not looking to have a donation of $5 million from here, $20 million from here, $50 million from there," Hariri said. "We’re looking for another scheme." 

Hariri said that Lebanon was looking for guarantees, probably from Western countries and multilateral institutions, that will enable it to borrow more cheaply on international capital markets. 

The prime minister said that privatization had been progressing in the right direction since he came to office six months ago, but added that the government needed more time to complete sales of state utilities such as telecoms and electricity. 

"It’s a very complicated matter," he said. "It has to be transparent and go through legal procedures and be clear to public opinion and the international community and financial institutions." 

Economist Marwan Iskandar, who organized the event, said he doubted whether the government could introduce a value-added tax (VAT) before June 2002. 

The VAT, which will help compensate for lower customs revenues after the tariff cuts late last year, is seen as a key step if Lebanon is to sign an association agreement with the European Union and move toward membership of the World Trade Organization – Albawaba.com 

 

 


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