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French Version

Azour : economic relations with Syria will not suffer

minister says privatization to be put on fast track

Finance Minister Jihad Azour said that the sour political ties between Lebanon and Syria will have no impact on economic relations between the two countries.

"Both countries are aware of the importance of economic and trade relations," Azour told The Daily Star on friday.

He added that Syria will continue supplying electricity to Lebanon and there is even an option to import power from other countries through Syria.

The Lebanese government's relations with its strong neighbor Syria deteriorated rapidly following accusations that Damascus was behind the assassination of former Prime Minister Rafik Hariri and other anti-Syrian political figures.

At one point, Syria partially closed its border with Lebanon, causing heavy losses for Lebanese exporters who usually transport most of their goods through Syria.

Syria resumed supplying electricity to Lebanon two months ago amid reports that both countries may reach new agreements on more power supplies.

In a wide ranging interview, Azour said the government intends to drastically cut export fees and streamline bureaucratic procedures to help Lebanese industrialists increase exports.

"We will meet with the Lebanese Industrialists Association next week to announce cuts in export fees and other measures," Azour told The Daily Star.

He added that export fees per container will be cut from the current price of $500 to $200.

In addition, the Finance Ministry and customs officials will facilitate all paperwork procedures for exports.

Local industrialists have been pressing successive governments to cut export fees and reduce red tape in government departments.

Lebanon exports nearly $1 billion each year but imports more than $7 billion, leaving

a very large balance of trade deficit.

The minister also announced that the privatization of some of the state owned assets will begin in earnest in 2006 with an option for the public to have a stake in some of the privatized entities.

Azour said privatization will be put on the fast track next year after all procedures and measures leading to this step are taken.

But Azour, who has just completed the 2006 draft budget, refused to project the expected revenues from privatization.

Privatization is one of the key elements in the five year plan that will be introduced to the international donor conference early next year.

The United States, France, the Arab states, World Bank and International Monetary Fund have pledged to provide a large soft loan with an option of a grant if the government introduced a convincing and feasible economic and fiscal reform plan.

But Azour warned if there was no political consensus on reforms and no international conference then the 2006 draft budget may include additional measures, a clear hint of new taxes.

"The donor states are telling us that any economic reform presented by the government should enjoy the support of all political parties in Lebanon."

But some analysts say the privatization program may face opposition from some Lebanese parties such as Druze leader Walid Jumblatt's Progressive Socialist Party and trade unions.

"If we have these conditions then we qualify for the conference and if don't have these terms then we won't have any conference," Azour stressed.

He added that Lebanon has a unique opportunity to turn the situation around, warning the country can no longer afford to miss any new chances.

"The first opportunity is that Lebanon has the opportunity to fix the mistakes of the past and change the course of debt management. The second opportunity is that the region is going though an economic boom thanks to the oil prices and Lebanon can benefit from this phenomenon."

Azour said that there are five pillars to the economic reform program.

"The first pillar is fiscal reforms; the second is optimizing assets managements such as privatization and other step, third is growth related agenda, and fourth is social safety net and the fifth is good governance."

Azour said that the 2006 draft budget, which projects a deficit of less than 25 percent, may include higher value added tax rate if the cost of the energy bill was not drastically cut.

He added that the government hopes that next year primary surplus will represent 4 percent of the country's GDP.

Beirut 02-01-2006
Osama Habib
The Daily Star

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