LEBANON: Members of Lebanese public react to Prime Minister Fouad Siniora's proposed economic reforms ahead of the Paris aid conference

Residents of Beirut remain divided along pro and anti-government lines, even when it comes to Lebanese PM Siniora's recent economic reform plan. The embattled Prime Minister -- and former Minister of Economy -- announced the new plan on Tuesday (January 2) ahead of the upcoming Paris III aid conference scheduled for the 25th of January. Siniora said that resolving Lebanon's economic problems was a necessary step for the country to emerge from its state of political deadlock. "Paris III is a big achievement for the country. It will help give us a boost and promote progress for us and our children. That's what I think. I believe it's good for the future of our children. It's very good. I don't know why people are opposing it (the economic reform plan). Why don't they give us reasons for their refusal of the project?" Beirut resident, Samar Salim Sraj told Reuters Television. But members of the opposition remain intransigent. General Michel Aoun -- leader of the Free Patriotic Movement allied with Hezbollah -- said in a recent news conference that the economic reform plan would not pass without the opposition's 'signature'. Aoun has long openly accused members of the current government of corruption and blames them -- and previous Hariri-led cabinets -- for the rising public debt. 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. Lebanese economist Sami Baroudi said that although Siniora's plan was a sensible one it was bound to solicit objections. "The economic reform programme that Prime Minister (Fouad Siniora) has prepared is a comprehensive plan designed to increase revenue and curb expenditure in order to deal with the public debt crisis and accumulating economic problems. In order to increase revenue, taxes will be increased in four or five sectors," Dr. Baroudi said from his office at the Lebanese American University.. "We are faced with a comprehensive range of additional taxes. Of course there will be a lot of complaining, especially with regards to added-value taxes. VAT has always been a controversial issue because it affects people with low incomes. But the government has been giving assurances that the tax increase will not include basic products. Nonetheless, many will feel the burden of this tax," he added. 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. 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 3, 2007

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