LEBANON: Lebanese Prime Minister Fouad Siniora announces economic reform plan ahead of aid conference in Paris

Lebanese prime minister Fouad Siniora announced on Tuesday (January 2) the completion of an economic reform plan ahead of an aid conference scheduled in Paris on January 25. Siniora -- who has been surrounded by protesters camping near the cabinet office in downtown Beirut since December 1 -- said that resolving Lebanon's economic problems was a necessary step for the country to emerge from its state of political deadlock. "Going to the donors' conference in Paris is not a luxury; rather it's a real need for us as Lebanese because the economic problems that are affecting all of us do not distinguish between those of us who are pro-government and those of us in the opposition. That is why we've decided to work towards securing economic and social income; which will also allow us to achieve real solutions without ignoring our political problems," Siniora said. "Since we have to prepare a plan for economic reform and reconstruction to submit to the international community in the conference for the support of Lebanon, the government has prepared a plan that includes a comprehensive range of structural reforms aimed at encouraging the economy, creating job opportunities, fighting unemployment, increasing productivity, increasing the competitiveness of the Lebanese economy and tackling social concerns; all of this will also enable to Lebanon to obtain the Arab and international aid that is considered a necessary aspect of the plan and essential to reform efforts," he added . The economic reform paper aims to reduce the debt-to-GDP ratio from 195 percent to 135 percent over the next five years. The paper also calls for the privatisation of the telecoms and electricity sectors, as well as the sale of the government's share in Middle East Airlines and the Intra Investment Company. Other suggestions include raising the value-added tax from 10 percent to 12 percent in 2008 and 15 percent in 2010. Taxes on interest paid on bank deposits would also increase from 5 percent to 7 percent in 2008. Lebanon, still struggling to recover from a devastating war with Israel, expects to garner over 4 billion dollars (USD) from donor countries in the Paris aid conference on January 25 to help reduce its huge public debt and avert a financial crisis. But the meeting was repeatedly postponed amid political bickering over an economic reform programme which the government had hoped would encourage lenders to be generous. "There is no doubt that the political issues on the table are very important for the present and future of Lebanon. However, the economic and social issues demand particular attention because of the dire condition of the Lebanese economy -- the fiscal budget -- especially after the July War. There is no doubt that in order to achieve national and political goals, we need a healthy economy -- or at least one that is heading in the right direction," Siniora said . Israel's war with Hezbollah in July and August left much of southern Lebanon in ruins and crippled the country's economy, reviving the urgent need to hold the conference. The Paris conference will be the third of its kind for Lebanon. A similar meeting in 2002, also in Paris, raised over 2.2 billion USD from Western, Arab and Asian lenders and helped Lebanon avert financial crisis, though reforms promised at the time never materialised due to political splits. Malaysia and Russia has already agreed to participate in the upcoming conference, while Arab oil producers, Europe, and the United States are expected to be major donors at the conference.

ITN Source | January 2, 2007

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