BEIRUT, 30 September 2003 — With its privatization program stalled amid a failure to implement structural reforms and under fire from political opponents, Rafiq Hariri’s Lebanese government has been forced to announce an expanded budget deficit for next year.
If no privatization is undertaken, the budget deficit will climb to 30.8 percent of gross domestic product (GDP) — or $6.16 billion — compared to 27.7 percent if steps are taken.
But even those figures appear optimistic given the results in the first eight months of 2003, when the deficit climbed to 38 percent. “In the current political climate we can’t undertake the reforms that we need,” said Finance Minister Fuad Saniora, Hariri’s right-hand man, Sunday as he unveiled the draft budget for next year.
He said that reforms, long-promised by Beirut, “are necessary and decisive in order to consolidate the stability of the economy and to achieve sustained growth and development across all Lebanese regions.”
But he lamented: “The way things are in the country now there is no room for maneuver to increase receipts or lower spending.” Saniora announced, however, that no new taxes would be levied.
Lebanon was described as the Switzerland of the Middle East before its 1975-1990 civil war and it has been struggling to recover ever since.
According to many experts, privatization is the only way to pull it out of the economic mire. The process has been unusually slow, despite the introduction of new laws on mobile telephones and the electrical sectors, and a reduction in debt servicing, where mountains of money disappear.
Quoted in the Lebanese press yesterday, Hariri said “hesitation and friction have halted all progress toward privatization and, consequently, any reduction in the burden on the state.” “I’m convinced that reforms are necessary and if we don’t undertake them it will cost us dearly in the future,” the prime minister said. But the promises of reform are not new and the media has jumped on Beirut’s failure to act.
