Lebanon commits to reforming state finances

PM calls on Italy to increase investment in Lebanon

BEIRUT, Feb 7, (Agencies): Lebanon’s new government on Thursday approved a policy statement committing to reforms that are seen as critical to putting the heavily indebted state’s finances on a sustainable path.

The statement sets the main policy objectives of Prime Minister Saad al-Hariri’s national unity government, formed last week after nine months of wrangling over cabinet portfolios.

A draft of the statement seen by Reuters on Wednesday said the government would launch fast and effective reforms that could be “difficult and painful” to avoid a worsening of economic, financial and social conditions.

Information Minister Ibrahim alJarrah said on Thursday the government policy statement had been approved with amendments in “phrasing more than essence”. It was drafted by a ministerial committee drawn from all the main factions.

Lebanon has one of the highest public debt-to-GDP ratios in the world, at around 150 percent.

International donor institutions and foreign governments want to see reforms before releasing some $11 billion in financial assistance pledged at a Paris conference last year.

Hariri aims to use the funds, mostly soft loans, for a capital investment programme that would boost low growth. Lebanon’s economy has been hit by factors including years of regional turmoil, such as the war in Syria.

Hariri’s government includes the heavily armed, Iran-backed group Hezbollah, which is deemed a terrorist group by the United States. Hezbollah has expanded its sway in the government, notably through naming the health minister.

Meanwhile, Lebanon’s prime minister urged his Italian counterpart on Thursday to have Italian companies invest in his country as it grapples with deepening economic challenges.

“The coming period in Lebanon is a period of work ... with many investment opportunities,” Saad Hariri told visiting Italian Prime Minister Giuseppe Conte.

Conte is the first foreign official to visit Lebanon after Hariri’s government was sworn in last week following a deadlock that last nearly nine months.

Lebanon is struggling with mammoth public debt, soaring unemployment and deteriorating credit ratings. Hariri’s government hopes to unlock around $11 billion in soft loans and grants pledged by international donors at a conference in Paris last year.

Lebanon in 2017 approved licenses for an international consortium led by France’s Total, Italy’s ENI and Russia’s Novatek to move forward with offshore oil and gas development for two of 10 blocks in the Mediterranean Sea, including

one that is disputed in part with Israel.

Italy also supports Lebanese military and security forces and has over 1,000 peacekeepers in the UN force monitoring the cease-fire with Israel.