Lebanon’s new govt to agree to economic reforms

Power sector, deficit, revenue ‘priorities’ for Lebanon: ministry

BEIRUT, Feb 6, (RTRS): Lebanon’s new government will agree to implement all the economic reforms the country promised at an international donor meeting last year, its finance minister said on Tuesday after talks to set policy.

Rival parties formed a new unity government on Thursday after nearly nine months of wrangling. Like the previous coalition, it is headed by Western-backed Prime Minister Saad al-Hariri and includes most major factions.

Since the government was formed, a cabinet committee has been working on a draft statement of government policy that will be put to parliament.

The ministerial statement will include all the reforms contained in a Paris conference of donors and the commitment to reduce the deficit and carry out fundamental reforms in various sectors, Finance Minister Ali Hassan Khalil told Reuters.

At last year’s conference, donors pledged more than $11 billion in infrastructure investment in Lebanon to help boost its weak economy, on condition the country carries out economic reforms. Hariri pledged at the conference to reduce the deficit as a proportion of GDP by a total of 5 percent over five years. Lebanon has one of the world’s highest levels of public debt, equivalent to around 150 percent of gross domestic product.

The policy statement will be put to cabinet for approval on Wednesday, before it goes to parliament, and will maintain the existing position of keeping out of regional conflicts like Syria, Information Minister Jamal al-Jarrah said earlier.

Lebanon declared a principle of “disassociation” in 2012 to keep the deeply divided state formally out of regional disputes such as the lengthy war in neighbouring Syria.

Washington had urged it to uphold that after the Iran-backed Hezbollah group gained more influence with another seat in cabinet. Despite the disassociation policy, the heavily armed Hezbollah has been fighting for years in Syria alongside President Bashar alAssad.

“We as a state are committed to distancing ourselves from events in the region,” Jarrah said.

Hezbollah’s bigger role – with three seats out of 30 in cabinet – reflects the greater clout it has obtained from involvement in Syria and gains by allies in May’s parliamentary election.

Ensure

The US government has urged Lebanon’s new government to ensure resources do not help Hezbollah, which it deems a terrorist organisation.

Meanwhile, Lebanon’s finance minister and a World Bank official see electricity reform, budget deficit reduction and revenue increases as priorities as the new government prepares its policy statement, the ministry said on Wednesday.

The tasks are among measures Lebanon has agreed to take in return for donors supplying $11 billion in infrastructure investment to help boost its weak economy.

“The two sides discussed the required reforms ... giving priority to electricity sector reforms and reducing the budget deficit and raising the level of revenues,” the ministry said in an emailed statement. Finance Minister Ali Hassan Khalil also said in the meeting that the ministry was ready to discuss the 2019 budget, numbers and details for which are “being reviewed”, the ministry said in a statement.

Following Thursday’s formation of a new government after months of wrangling, President Michel Aoun on Tuesday Tweeted that the period of crisis had passed.

“The crises are behind us and the financial situation is improving and it is expected that the interest rate will fall soon,” he wrote.