Lebanon’s Aoun vows to tend to economic, financial reforms

BEIRUT: Lebanon is expected to begin implementing in October a set of economic and financial measures agreed by its top leadership that will boost economic growth, President Michel Aoun said on Sunday, vowing that he would to tend to this himself.

He was referring to decisions taken at a top-level meeting earlier this month with the aim of reviving an economy that has been growing slowly for years and is struggling with one of the world’s heaviest public debt burdens.

After the Aug. 9 meeting, Prime Minister Saad al-Hariri said agreed steps included finishing the 2020 budget on time, drawing up a plan to start $3.3 billion of projects approved by parliament, full implementation of a power sector reform plan, and laws to fight tax evasion and regulate public tenders.

“I will personally tend to the implementation path of the decisions of the financial and economic meeting” in cooperation with Prime Minister Saad al-Hariri, Parliament Speaker Nabih Berri and other parties in government, Aoun said.

In written comments to Reuters, Aoun said this aimed “to guarantee political stability in cabinet and outside it and to secure the greatest amount of productivity”, including in the implementation of the 2019 budget and its reforms.

Aoun said he expected “the implementation path” to begin “with the start of October after the conclusion of the current preparations … which will lead to lifting of the growth rates, reflecting positively on the economic and financial situations”.

After years of backsliding on economic reform, the impetus to act has grown due to economic stagnation and a slowdown in the flow of dollars into Lebanon’s banks from abroad. Lebanon has depended on such flows from its diaspora to finance the current account and the state budget deficits.

Foreign governments and donor institutions last year pledged $11 billion in financing to Lebanon for major infrastructure at the so-called Cedre conference in Paris, on condition that it carries out reforms.

Measures to reduce the budget deficit and reform the power sector, which bleeds public funds while inflicting daily power cuts on Lebanese, are seen as two vital tests of the government’s ability to reform.

The International Monetary Fund said in July this year’s deficit is likely to be well above a targeted 7.6% of national output.

It said the power reform plan and a budget to reduce the deficit were “very welcome first steps” and “further substantial fiscal adjustment and structural reforms” were needed.

Aoun said work was underway to approve the 2020 budget in the constitutional timeframe.

It would include “new, resolute reforms” agreed at the Aug. 9 meeting to reduce the power sector deficit, improve tax collection and fight customs and tax evasion.

Aoun also said frameworks must be put in place for implementing a plan drawn up by management consulting firm McKinsey for revamping the economy and this should coincide with the start of projects outlined at the Cedre conference. (Writing by Tom Perry Editing by Alexandra Hudson)

Source from: The Peninsula