Lebanon expects to garner over $4 billion from donor countries at aid talks in Paris next year to help reduce its huge public debt and avert a financial crisis, Lebanese economy and trade minister said on Thursday.
The conference, dubbed "Paris 3", has been delayed 10 days to January 25 for logistical reasons, and is expected to help Lebanon cope with its public debt of around $38 billion, which is almost 200 percent of GDP and whose servicing consumes at least two-thirds of government income.
A 2002 aid conference held in Paris raised the country just over $2.2 billion in soft loans, Haddad told Reuters in an interview on Thursday. "We expect to get much more in Paris 3, more than double this amount and we expect to get soft loans but we also expect to get grants ... and there is a very serious possibility that we will have an IMF program," he said.
"We are in desperate need of this big financial aid package and if we don't succeed in going to Paris 3 and we don't get the support we expect we run the risk of facing a very serious financial crisis. It's a make or break conference," he said.
Haddad said Saudi Arabia, Kuwait and Qatar had donated over $1 billion after the war between Israel and Hezbollah ended on August 14 and expected Arab oil producers, Europe and the United States to be major donors at the conference.
Lebanon's economy is expected to shrink 5 percent due to the war, but Haddad said he was confident growth could reach 10 percent in 2007. The Paris aid meeting was due to be held last year but has been repeatedly postponed amid political bickering over an economic reform programme which the government had hoped would encourage lenders to be generous.
The package includes privatisation, specifically of Lebanon's two mobile telephone providers, increasing tax revenues and measures aimed at spurring private investment. It also aims to improve health and education.
But Israel's war with Hezbollah has left much of southern Lebanon in ruins, crippling the country's economy and reviving the need to hold the conference against a background of domestic political tensions. "I'm very optimistic that we will go to Paris 3 because if we don't go to Paris 3 it will be an economic disaster for the country and nobody wants to have an economic disaster on their hands," he said.
"Any political faction that will prevent us from going to Paris 3 with a credible economic reform package will be basically condemning the economic future of the country for the next few years." Parliament Speaker Nabih Berri has called for roundtable talks among Lebanon's feuding political leaders to defuse a simmering crisis threatening the country's stability.
Hezbollah and its allies have been demanding a new government since the war ended but anti-Syrian coalition members, who dominate in Prime Minister Fouad Siniora's government, have dismissed the call. This led Hezbollah leader Sayyed Hassan Nasrallah to give the coalition until mid-November to agree to a national unity government or face protests demanding new elections.
Haddad said he expected the talks to result in a lowering of political tensions. "What should happen is most people should understand that it's in their narrow political interests to think of ... political stability and security. You cannot be a prospering country if you're under threat of political assassination or ... mass demonstrations."
"My personal feeling is that we will reach an agreement in order to save the economy and we can continue to fight politically later," he said in his downtown office overlooking Beirut's financial district. "This economy is suffering from cancer. This cancer is called debt and this cancer is growing," he said, adding the problem was treatable if dealt with quickly.
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