Siniora also told Reuters his government was seeking to accelerate implementation of new infrastructure projects to boost confidence in an economy forecast to grow by 4 per cent this year despite a global slowdown.
“In the coming two years, we have at least $3 billion worth of projects that are going to be executed,” he said.
A former finance minister, Siniora is a close ally of billionaire politician Saad Al Hariri. Siniora’s cabinet has enjoyed financial and political backing from many Western and Arab governments.
He said Lebanon’s new administration would have to immediately “send the right messages to the world” on the economy. Lebanon has one of the heftiest public debt burdens in the world.
“Because if they don’t send the right messages, then definitely they will be speculating at a time that Lebanon cannot afford to have a speculative type of thinking,” said Siniora, prime minister since 2005.
“It is very important to send the right messages that can inspire confidence about the prudent policies... that we are committed to reform,” Siniora said. “There is no other way, other than adopting the same policies.”
Siniora has sought to move ahead with major reforms, including the sale of two state-owned mobile phone firms. The sale, initially held up by a political crisis, has now been postponed because of poor market conditions.
Reforms are seen as vital to putting Lebanon’s public finances on a sustainable path.
Privatisation proceeds are to be used to pay off some of the public debt, which stood at some $47 billion in December, equivalent to around 160 per cent of gross domestic product (GDP). The ratio was as high as 180 per cent in 2006.
“This tells you how much progress we have managed to achieve,” Siniora said. The next government must respect the existing approach to debt management. “That’s how things are going to be done. Otherwise it is not in the interests of the Lebanese,” he said.
Moody’s Investors Service last week upgraded Lebanon’s credit ratings, citing a “substantial improvement” in the country’s external liquidity and the “proven resistance” of the public finances to shocks.
Lebanon will need to borrow more this year to finance a total deficit projected at some $4 billion.
Siniora said there was progress towards resolving a dispute that has held up approval of the 2009 budget, which has a deficit equal to around 12 per cent of GDP.
Tags: Business, Economy, Hariri, Lebanon, Siniora, source: Reuters
