ANSD : Hariri: Lebanon taking measures to avoid collapse

THU 18 - 4 - 2024

Date: Apr 12, 2019
Source: The Daily Star

Hariri: Lebanon taking measures to avoid collapse

_{Hussein Dakroub| The Daily Star}
BEIRUT: Lebanon is taking preemptive measures to deal with the chronic budget deficit to avert a much-feared collapse of its economy, Prime Minister Saad Hariri said Thursday, in the government’s latest push to enact key economic and financial reforms.

Despite economic difficulties facing the country, Hariri reassured the Lebanese that Lebanon’s financial and monetary situation was stable. He spoke at the beginning of an ordinary Cabinet session he chaired at the Grand Serail with 34 items on the agenda.

“The best decision we have made in Lebanon is to carry out measures to deal with the [budget] deficit and adopt an austerity budget before the [economic] crisis strikes,” Hariri told the ministers. “Other countries were forced to take more difficult, tougher and more painful measures because they waited for the crisis to happen before taking action.”

“The key here is to take measures to avoid the crisis and be able to manage the steps in a way that protects the economy and citizens,” he added.

“Our situation in Lebanon is still reassuring. The confidence in our economy, our financial and monetary stability and the future of growth still exists, as long as we are taking the necessary measures,” Hariri said. “This is our responsibility of the Cabinet and Parliament and should be based on the consensus among all political parties represented in the government on the measures that will be included in the budget and on its good implementation,” he added.

Many Lebanese officials and bankers have warned recently that Lebanon was threatened with an economic collapse if quick and painful measures, namely a string of structural fiscal and economic reforms adopted at the CEDRE conference, were not taken.

Neither Hariri, nor Finance Minister Ali Hasan Khalil, has so far elaborated on the austerity measures the government plans to take to improve the economy.

Khalil last week submitted to Hariri the 2019 draft state budget that included reductions in all ministries’ spending as a means to slash the deficit. He has called for reducing the budget deficit by 2.5 percent each year for the next five years.

Reducing the deficit-to-GDP ratio, which reached 10 percent in 2018, by 1 percentage point every year over five years was one of the key pledges Lebanon made at the CEDRE conference in Paris, where donor countries pledged around $11 billion in grants and soft loans to finance key investment and infrastructure projects, which Lebanon can unlock after it implements a series of key reforms.Monday, the Cabinet sent a strong signal to the international community about its intention to enact reforms by unanimously endorsing a new electricity plan aiming to restructure the dilapidating sector, boost power supply and reduce subsidies to the state-run Electricite du Liban, estimated at $2 billion annually.

Hariri praised the passing of the electricity plan, pointing to its “positive effect on the monetary and financial markets and on the confidence of investors in the future of the Lebanese economy.” He said the electricity plan was the “first signal of the government’s seriousness to reduce the budget deficit, curb the waste of public funds, and implement the CEDRE commitments.”

Speaking to reporters after the Cabinet session, Information Minister Jamal Jarrah said the 2019 draft budget would be presented to the Cabinet very soon. “We will set the financial situation in order,” he said, adding that Hariri and Khalil were putting the “final touches” to the draft. “The draft budget has reached the Cabinet’s Secretariat General, and God willing, there will be sessions soon to discuss it,” Jarrah said.

Speaker Nabih Berri also sounded optimistic about overcoming the economic crisis. He praised the approval of the electricity blueprint, but stressed that it should be followed by the endorsement of the 2019 budget.

Asked how can Lebanon avoid becoming another debt-ridden Greece, Berri, after meeting with visiting Greek President Prokopis Pavlopoulos at his Ain al-Tineh residence, told reporters: “Hope for the best and you will find it. I don’t want to say that this month is fateful, but I say that it’s a very delicate month to take measures, at the forefront of which is the budget issue.”

“The electricity plan is a step in the right direction. Although it is essential, but it is insufficient at all. What’s important is to express our future plans in the budget issue in order for the country to return to stability,” he said.

Hezbollah’s parliamentary bloc also commended the endorsement of the electricity plan and called for its implementation. It also urged the Cabinet to quickly discuss the 2019 draft budget.

“The Lebanese Cabinet’s approval of the electricity plan is an important achievement which we call for putting it into effect,” a statement issued after the weekly meeting of the Loyalty to Resistance bloc said. It expressed hope that political parties would cooperate to implement the plan so that “it would not face the same fate of previous plans that were approved in 2010 and 2012.”

Underlining the need for an audit of the budgets between 1993 and 2017, the bloc called on the government to quickly debate the 2019 draft budget and refer it to Parliament for final ratification.

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