|Kuwait, UAE set to release $600m in soft loans - Daily Star
|Kuwait and the United Arab Emirates will distribute $600 million in low-interest soft loans next week to help Lebanon reduce debt servicing, Finance Minister Fouad Siniora said Friday.
Siniora disclosed the details of the loans to Journalists Union head Melhem Karam during a meeting at the Finance Ministry. The Finance Ministers of Kuwait and the UAE are expected to front the $600 million in the form of eurobonds with 15-year maturities.
The interest rates on these bonds are not expected to exceed 5 percent. Malaysia and Oman already subscribed to $350 million in eurobonds last week. This brings the total of eurobonds purchased by these states to $950 million.
Siniora also said that Saudi Arabia, Qatar, Bahrain, France, Canada and Italy are expected to buy more eurobonds from the Lebanese government at even cheaper rates. Donor states have pledged $3.1 billion in soft loans to help the government tackle the $31 billion public debt. The government hopes to reduce debt servicing by at least $300 million in 2003 by issuing these low-interest bonds.
The Finance Ministry projected a deficit of 25 percent in its 2003 draft budget, which has yet to be approved by Parliament. Debt servicing, which consumes 90 percent of government revenues and 48 percent of the total budget, reached more than $3 billion at the end of 2002.
In addition to the cheap bonds from the donor states, the government of Prime Minister Rafik Hariri expects to generate $5 billion from privatization and securtization this year. All the proceeds from privatization will be used to reduce the public debt, officials claim.
The World Bank, the Arab Monetary Fund and other financial institutions have agreed to grant Lebanon an additional $1.3 billion in soft loans for development projects.
Siniora told Karam the donor states agreed to help Lebanon after the government took drastic measures in 2001 and 2002 to tackle the public debt. He cited the minister as stating that the banks will be encouraged to lower interest rates on loans to the private sector after they secured new funds from abroad.
The Daily Star