No need for more talks over draft budget: Lebanon finance minister

Lebanese Finance Minister Ali Hassan Khalil attends a cabinet meeting at the government palace in Beirut, Lebanon, May 21, 2019. (Reuters)
Updated 21 May 2019

No need for more talks over draft budget: Lebanon finance minister

  • Lebanon’s proposed austerity budget may please international lenders but it could enrage sectors of society
  • Lebanon has one of the world’s heaviest public debt burdens at 150 percent of GDP

BEIRUT: Lebanon’s finance minister said on Tuesday there was no need for more talks over the 2019 draft budget, seen as a vital test of the government’s will to reform, although the foreign minister signalled the debate may go on.
The cabinet says the budget will reduce the deficit to 7.6% of gross domestic product (GDP) from last year’s 11.2%. Lebanon has one of the world’s heaviest public debt burdens at 150% of GDP.
“There is no longer need for too much talking or anything that calls for delay. I have presented all the numbers in their final form,” Finance Minister Ali Hassan Khalil said.
But Foreign Minister Gebran Bassil suggested the debate may go on, telling reporters: “The budget is done when it’s done.”
While Lebanon has dragged its feet on reforms for years, its sectarian leaders appear more serious this time, warning of a catastrophe if there is no serious action. Their plans have triggered protests and strikes by state workers and army retirees worried about their pensions.
President Michel Aoun on Tuesday repeated his call for Lebanese to sacrifice “a little“: “(If) we want to hold onto all privileges without sacrifice, we will lose them all.”
“We import from abroad, we don’t produce anything ... So what we did was necessary and the citizens won’t realize its importance until after they feel its positive results soon,” Aoun said, noting Lebanon’s $80 billion debt mountain.
A draft of the budget seen by Reuters included a three-year freeze on all forms of hiring and a cap on bonus and overtime benefits.
It also includes a 2% levy on imports including refined oil products and excluding medicine and primary inputs for agriculture and industry, said Youssef Finianos, minister of public works and transport.
Marwan Mikhael, head of research at Blominvest Bank, said investors would welcome the additional efforts in the latest draft to cut the deficit.
“There will be some who claim it is not good because they were hit by the decline in spending or increased taxes, but it should be well viewed by the international community,” he said.
Jason Tuvey, senior emerging markets economist at Capital Economics, said: “The numbers will be of some comfort to investors, but the devil will be in the detail.”
“Even if the authorities do manage to rein in the deficit, it probably won’t be enough to stabilize the debt ratio and some form of restructuring looks increasingly likely over the next couple of years,” Tuvey said.
The government said in January it was committed to paying all maturing debt and interest payments on the predetermined dates.
Lebanon’s main expenses are a bloated public sector, interest payments on public debt and transfers to the loss-making power generator, for which a reform plan was approved in April. The state is riddled with corruption and waste.
Serious reforms should help Lebanon tap into some $11 billion of project financing pledged at a Paris donors’ conference last year.
Once approved by cabinet, the draft budget must be debated and passed by parliament. While no specific timetable is in place for those steps, Aoun has previously said he wants the budget approved by parliament by the end of May.
On Monday, veterans fearing cuts to their pensions and benefits burned tires outside the parliament building where the cabinet met. Police used water cannon to drive them back.

Miami to become new powerhouse of tech startups

Updated 7 min 10 sec ago

Miami to become new powerhouse of tech startups

  • That diversity offers startups access to markets on the US East Coast, Latin America and Europe, according to experts

MIAMI: Miami is famous for beach parties, gators that wander onto golf courses and iguanas that tumble out of palm trees.

But now the city of “Scarface” and “Miami Vice” is vying to become a new powerhouse of tech startups that some in the business hope will spawn a novel phenomenon — the “iguanacorn.”

The word is meant to represent the tropical answer to the Silicon Valley “unicorns,” startups that are worth more than $1 billion.

While still lagging behind San Francisco and New York, the Florida city is trying to position itself as a tech hub, and already has its first “unicorns” under its belt. They include ParkJockey, which has disrupted the car parking sector, and Magic Leap, which takes users into the world of augmented reality.

Looking to surf the Florida tech wave, so-called startup accelerators — firms that invest in fledgling tech ventures and speed up their early development — are starting to pop up in southern Florida.

Among the leaders is 500 Startups, which opened a Miami branch last year, as well as TheVentureCity, set up two years ago to offer opportunities to Latin American and European entrepreneurs who lack Silicon Valley contacts.

“Not everyone comes from Stanford or Columbia, from MIT, and has their own ‘network’ built up in San Francisco,” said Laura Gonzalez-Estefani, a former Facebook executive and co-founder of TheVentureCity.

The idea of her company is to “identify the best businesses outside of Silicon Valley and give them a boost,” she told AFP. She jokingly refers to such ventures as “iguanacorns.”

“‘Iguanacorns’ is the way we tag the unicorns that are coming from emerging tech hubs,” she said.

In keeping with that idea, her office is decorated with pictures of unicorns and their tropical, reptilian cousins.

Ana Gonzalez, head of 500 Startups Miami — which has its main headquarters in Silicon Valley — said that Miami’s “entrepreneurial ecosystem is at an inflection point.”

Her goal too is to “connect resources and expertise from Silicon Valley with Latin America and the Southeast United States.”

Miami is already an international city, home to a diverse mix of Latinos and Europeans who can snack on Cuban croquettes or cross the street and find Russian “syrnikis,” pancakes stuffed with cottage cheese.

Fifty-three percent of the city’s 2.7 million residents are foreign-born, and locals joke that Miami is the only foreign city Americans can visit without a passport.

That diversity offers startups access to markets on the US East Coast, Latin America and Europe, according to experts.

Additional draws include low taxes, a lower cost of living compared to San Francisco and New York, and a pleasant climate — if you don’t mind hurricanes.

“A big percentage of our entrepreneurs are not from here,” said Brian Breslin, head of the University of Miami’s Entrepreneurship Center.

“Whether it’s South America or Europe or other parts of the United States, they’re coming here for lifestyle reasons, cost-of-living reasons, safety/security, access to different markets. So there’s a lot of different value-adds of being here compared to, say, going to San Francisco, or New York, or Boston, or any of the other traditional tech hubs,” he said.

According to 2019’s Global Startup Ecosystem Report, which analyzes the health of tech ecosystems around the world, Miami is one of the ten cities to emerge as a hub this year, and ranks in the top 30 of the most important startup centers globally.

Tech sector workers in the city increased by 40 percent between 2012 and 2018, the report said, noting that “Miami is becoming a tech powerhouse.”

And Breslin said the cycle of growth in more established tech hubs indicates that more expansion is yet to come.

“I don’t think we’ve peaked yet. I think there’s still growth to be had,” he said.

“People go work at Facebook, or Google, make a ton of money and go start a new business. And we’re just now getting to that point where people made a lot of money working at, at Ultimate Software, hopefully soon at Magic Leap, and then those people will turn around and start the next wave of businesses,” he said.