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French Version

Blockade deprives state of vital revenues from ports

Losses from beirut alone put at $5 million daily

Fifteen days in, the naval, air and land blockade on Lebanon is depriving the Treasury of customs and VAT revenues - normally the government's largest source of income.

A senior official at the Finance Ministry said that 75 percent of the VAT and customs revenues come from Beirut port, which has been under a two-week long Israeli naval siege.

All of Lebanon's air and sea outlets are under an Israeli blockade following the abduction on July 12 of two Israeli soldiers by Hizbullah fighters.

Average total revenues from the VAT and customs revenues are close to $2 billion a year. Revenues from Beirut port alone are more than $5 million a day.

Officials warn that the blockade will have negative effects on the budget deficit this month.

"We may lose more than $200 million in revenues a month if the blockade continues without any end in sight," the Finance Ministry official told The Daily Star.

He added that the Finance Ministry has enough funds to pay the salaries of government staff for another two months.
There are close to 200,000 army and security personnel in addition to civil servants and contractual employees on the government payroll.

Only a handful of ships are anchored at Beirut port, while the remaining vessels headed for Beirut have been forced to steer to other ports in Cyprus, Greece, Turkey and Egypt.

The Israelis allowed France and the United States to send navy ships to evacuate Western citizens who were stranded in Beirut after the fighting erupted.

If the blockade continues for other weeks, the budget deficit in July and August will rise, according to economists.

Figures released by the Finance Ministry show that the gross public debt reached $38.8 billion at the end of May 2006, up 0.7 percent from the end of December 2005 and up 0.5 percent when compared to the previous month.

The government presented a bold reform program before the war started to cut the public debt and stimulate the economy but the new reality prompted Finance Minister Jihad Azour to say that the government will revise its reform plan.

But the government hopes that the donor states will rally behind Lebanon, contribute to the reconstruction of devastated infrastructure and also grant the country soft loans to reduce debt servicing, the largest line item in the budget.

Saudi Arabia rushed to Lebanon's rescue, pledging $500 million in humanitarian aid and $1 billion to be deposited in the Central Bank.

"Saudi Arabia's pledge of $1.5 billion for war-damaged Lebanon is helpful for the country's near-term rating prospects although they remain on negative credit watch," Standard & Poor's said on Wednesday.

On July 13, as the Israeli assault on Lebanon intensified and Hizbullah fired rockets and missiles into northern Israel, S&P put Lebanon's long-term credit outlook at "B-."

Not only did Lebanon's ports stop receiving new shipments when the blockade began, but shipments that had already been received sat untouched.

"There are still hundreds of containers that were downloaded from commercial vessels that are still sitting at Beirut port," said Elie Zakhour of the Chambre Internationale de Navigation de Beyrouth.

Zakhour added that the blockade dealt a severe blow to the shipping companies, importers, trades and the port itself.

"About 90 percent of Lebanon's imports come from Beirut port and one can imagine the losses traders and importers have lost," Zakhour said.

He added that the insurance premiums on ships heading to Lebanon and Israel have jumped 10 times due to the ongoing hostilities.

Hassna Qoraytem, the president of the port, said that the port's revenues from unloading and uploading cargoes and containers have also been affected by the war.

"We usually collect $7 million in fees each month form the port operations," Qoraytem said.

Qoraytem added that the port's staffs are still doing their usual work.

"We are waiting until this conflict is over so we can get back to receiving ships," Qoraytem said.

Beirut 27-07-2006
Osama Habib
The Daily Star

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