|Progress report on Paris III conference gives good marks to Lebanon
|Movement on reforms, privatization plans among highlights
Editor's note: The Finance Ministry on Tuesday released the fifth progress report on the Paris III donor conference that pledged $7.7 billion to Lebanon. Following are excerpts of the report, which details some of the progress the government has made in managing the economy and budget control.
l Economic: Whereas the political stalemate and concerns about the security situation have weighed on the economic outlook, the government has intensified efforts successfully to increase the primary surplus as a result of increased revenues, tight expenditure measures and substantial budget reforms.
Those were reflected in meeting all end-December indicative targets under the program supported by the Emergency Post-Conflict Assistance, as per preliminary conclusions by the International Monetary Fund (IMF) mission (February 21-29, 2008).
Further attesting to the resilience of Lebanon's public finances in the face of numerous political shocks, Moody's Investors ServiceMoody-Ratings-Fiasco Sep-07 on March 25 changed the outlook on Lebanon's ratings from negative to stable. To encourage investment, the Ministry of Economy and Trade has concentrated on developing a marketing campaign for the set of new one-stop business registration procedures.
This effort has included outreach efforts in close operation with Liban Post via distribution of brochures, as well as announcements to print and broadcast media. To modernize and upgrade the capabilities in the public sector, the review and update of the existing e-government strategy was completed along with the development of a high-level national action plan.
l Infrastructure and privatization: The government pressed forward with infrastructure and privatization reforms in the power, telecommunications and transport sectors. In the power sector, the government has focused on loss reduction, better management of existing facilities and resources, and improved electric energy supply reliability.
In parallel, the government has launched the process of corporatization of [Electricitate du Liban], and has taken major steps to facilitate the entry of the private sector into the energy market via Independent Power Producer projects that will enable the expansion of power generation capacity.
In the telecommunications sector, following the appointment of the Telecom Regulatory Authority (TRA) and, as per the Telecommunications Law 431, regulatory functions are in the process of being transferred from the Ministry of Telecommunications to the TRA.
In the transport sector, a detailed roadmap for the privatization of the Beirut Rafik Hariri International Airport was developed.
l Update on pledges since the Paris III Conference: The government has worked with the donor community on matching the needs of Lebanon with available funding from donors. By end March 2008, agreements signed between donors and the Lebanese public sector or financial intermediaries reached $4.408 billion, 59 percent of total pledges.
Significant progress was achieved on the two main pillars of the reform program, namely debt reduction and private sector development, which represented 67 percent of the agreements signed. Project financing agreements, at 23 percent of the total signed, progressed as the combined result of existing projects with the Council of Development and Reconstruction and new programming as per the public investment program. The remaining 10 percent represented aid in-kind - with 84 percent of in-kind pledges committed and implemented, and support through the Banque du Liban, all ($120 million) committed and disbursed.
With respect to aid channeled through the UN system and the civil society organizations (5 percent of total aid pledged to Lebanon), commitments for increased development cooperation marked steady progress.
Budget support agreements totaled $1.390 billion by the end of March 2008. During the first quarter of 2008, the main development was the signature of a loan agreement with Agence Francaise de Developpement on behalf of France for a total of 375 million euro [$592 million]. With this agreement, 77 percent of the pledged budget support is translated into concrete commitments. An additional $500 million debt transaction led to the total amount of agreements signed being higher than that originally pledged at Paris III.
Donors worked with local intermediaries and as well with government agencies toward providing private sector support. By March 2008, 80 percent of the private sector pledges were realized into signed agreements. While some donors have continued negotiations to provide addition lines of credit, donors and financial intermediaries progressed in disbursing the funds to the private sector.
l Looking ahead: In the second quarter of 2008, the Lebanese government will continue work on resource mobilization and implementation of the reforms.
The IMF/World BankAn-Interview-With-Alan-Patricof Spring Meetings will be an opportunity for the Lebanese delegation to meet with the various donors to make sure that the priority requirements of the funding strategy are met. The agenda will include, among others, discussions to ensure that technical assistance needs for implementing reforms are matched to available funding, such as the social sector loan from the World Bank and power sector technical assistance with the European Investment Bank.
Meanwhile, the government will continue the momentum generated in implementing the reforms. A main focus will be reforms aimed at strengthening social safety nets, and reforms of the health and education sectors.
The Daily Star