New Lebanon government calls for ‘painful economic reforms’

Lebanese Prime Minister Saad Al-HarirI heads a meeting to discuss a draft policy statement at the governmental palace in Beirut. (Reuters)
Updated 07 February 2019

New Lebanon government calls for ‘painful economic reforms’

  • State jobs hiring freeze as Lebanon tightens belt
  • Statement sets the main policy objectives of Prime Minister Saad Al-Hariri's government

BEIRUT:  Lebanon is to freeze hiring for state jobs as it embarks on a program of economic reform described as “difficult and painful.”

The halt to new government employment “in all its forms” will last throughout 2019, followed by four years of replacing only half the number of people who retire, and on condition that strict new deficit reduction targets are met.

A draft government policy statement, parts of which were leaked on Wednesday, sets the main policy objectives of Prime Minister Saad Hariri’s national unity government, which was formed last week after nine months of wrangling over ministerial appointments.

The statement commits to bringing down the debt-to-GDP ratio by boosting the size of the economy and reducing the budget deficit. The government is committed to a “financial correction” equal to at least 1 percent of the GDP a year over five years.

This would be achieved by boosting revenues and cutting spending, starting with transfers to the state-run power company, which the World Bank has described as a “staggering burden” on the public finances.

Information Minister Jamal Al-Jarrah said the government was not considering tax increases. There were no major points of contention over the policy statement and it was expected to be approved by the government on Thursday, he said. “The atmosphere was very positive and there was no dispute about any point.”

Hariri’s adviser Nadim Al-Mulla told Arab News: “The government will implement reforms on the restructuring of the electricity and water sector, and tackle corruption.

“Most of the measures aim to reduce the deficit by reducing expenditure. The reduction will affect all ministries without exception and will include administrative expenses.”

The policy statement also said the government would continue the policy of exchange rate stability, as a priority for “social and economic stability.” The Lebanese pound has been pegged to the US dollar for over two decades.

Lebanon has some of the world’s worst debt and balance-of-payments ratios but has avoided financial disaster, confounding critics who have warned for years of debt defaults and a collapse of the pound; all have failed to materialize.

Nevertheless, pessimists were out in force on Wednesday. The Lebanese economy was “an unsustainable story over the medium term,” said Kevin Daly of Aberdeen Standard Investments.

“Having a government in place, that’s important, but they need to address key vulnerabilities and the big one is in the electricity sector — that plus no growth.”


Oil prices rise as faith in supply cuts grows

Updated 26 May 2020

Oil prices rise as faith in supply cuts grows

  • Producers are following through on commitments to cut supplies as fuel demand picks up with coronavirus restrictions easing
  • OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices

NEW YORK: Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). US West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.
Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.
“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the US rig count hit a record low of 318 last week.