|Private sector cautious over 'Paris II'... - The Daily Star
|Private sector cautious over 'Paris II' business grouping says state must make good on reform promises - The Daily Star
Beirut Chamber of Commerce adopts wait-and-see approach, calling for government to speed up privatization, lower expenditures.
Economic bodies appear satisfied with the outcome of the 'Paris II' donor conference, but they are waiting for government to make good on its promise of reform made during the November meeting.
The bodies, grouping the major private sector business associations, said in a statement released Tuesday after a closed door meeting, that the state must make good on its promises to lower expenditure and speed up privatization efforts.
Adnan Qassar, head of the Beirut Chamber of Commerce, delivered the economic bodies' assessment of the Paris II meeting, which pledged to grant Lebanon more than $4 billion in soft loans.
"Paris II is not a panacea to Lebanon's troubles," said Qassar. "It is only a first step " we need to ensure that the government carries out its economic reform program." This first step, however, had been followed by certain procedures that businessmen have questioned. "We are counting on officials to iron out political differences that have impeded the speedy privatization of the mobile sector," said Qassar. "We also totally oppose any attempt at introducing new taxes that will heap extra financial burden on citizens."
Qassar also expressed reservations over Parliament's endorsement Monday of a law absolving citizens from paying outstanding electricity bills.
"I will not comment on this bill, but let me say, for the future, it will be unhelpful to absolve people from paying any kind of dues," he said. Qassar had previously questioned the timing of such a bill when the government was footing the losses of the state-run Electricite du Liban. He also questioned the government's proposal to scrap social security dues of the private and public sectors.
"A large part of our discussion today was dedicated to the social security issue and we are against absolving people from paying social security payments," said Qassar. "We also call on the government to take time to study the new proposed framework for the social security fund."
Qassar called on the government to first focus on the 'fat' public payroll before slashing money earmarked for development projects in the 2003 fiscal draft bill, which still awaits Parliament's approval. Despite these lingering economic thorns, the economic bodies hailed Paris II for renewing confidence in the pound, which has appreciated over the past two weeks, and led to a lowering of interest rates on government Treasury bills.
"Just in the past two weeks, interest rates on two-year government T-bills have dropped by 400 basis points to 12.2 percent," said Joseph Torbey, head of the Lebanese Association of Banks during the conference. "This is a substantial drop."
Qassar had previously expressed cautious optimism about the outcome of Paris II, where international donors pledged $3.1 billion in soft loans to help tame Lebanon's $30 billion public debt and approximately $1.3 billion to finance development projects.
"Although we do not know the exact borrowing terms for these soft loans, these terms are certainly better than the current ones," Qassar said. The government has yet to specify the rates and maturities of the soft loans, which are expected to enter the country as of January 2003. But Torbey said he was confident about the flow of donor loans.
"As we speak, there are delegations from two donor countries finalizing terms for soft loans," Torbey said. "I am pretty sure most of the money will have filtered into the country by the beginning of next year."
The Daily Star