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.”


Saudi Arabia opens new logistics zone in Jeddah

Updated 13 October 2019

Saudi Arabia opens new logistics zone in Jeddah

  • The Al-Khomra zone extends over 2.3m square meters in Jeddah
  • It will support activities around shipping, freight distribution and transport of goods

RIYADH: Saudi Arabia launched on Sunday a new logistics zone open to private investors in the Red Sea port city of Jeddah, as part of a wider industrial initiative to diversify the economy away from oil and create jobs for Saudis.
The Al-Khomra zone — which will support activities around shipping, freight distribution and transport of goods — extends over 2.3 million square meters in Jeddah, home to one of the Kingdom’s largest ports.
As the biggest logistics zone in the country, it hopes to turn Saudi Arabia into a global logistics hub and create 10,000 direct jobs, said Minister of Transport Nabeel Al-Amudi.
It is part of the broader National Industrial Development and Logistics Program (NIDLP), which aims to create 1.6 million jobs and attract investments worth SR 1.6 trillion ($427 billion) over the next decade. Of that, SR 135 billion is earmarked for investment in the logistics sector.
Under its ambitious reform strategy, the Kingdom plans to have the private sector operate much of its transport infrastructure, including airports and sea ports, with the government keeping a role as regulator.
Details of what the government plans to offer investors in Al-Khomra were not disclosed, but the Saudi Ports Authority  (Mawani) said the zone would offer opportunities to investors on a lease basis.
“Investment in the logistics zone in Al-Khomra and other ports will total SR 7 billion,” said Saad Al-Khalb, president of the Saudi Ports Authority.
Al-Khomra joins other logistics zones in the `kingdom — the King Abdullah Economic City north of Jeddah has its own port and offers logistics investments and NEOM, a mega project announced in 2017, has plans for a logistics zone.
Over a decade ago, the Saudi government spent $30 billion to build six economic cities across the Kingdom to diversify the economy, create jobs for young Saudis and attract foreign investment, though many of the projects have failed to achieve expected results.
After decades of spending on development projects, the government has made attracting greater foreign investment a cornerstone of its Vision 2030 plan.