PARIS — International donors are set to give the green light to a US$10-billion investment plan for Lebanon at a conference in Paris on Friday, hoping to stave off an economic crisis.
Lebanon’s economic growth has plummeted due to repeated political crises, compounded by the Syrian war which has sent a million refugees across the border — equivalent to a quarter of the Lebanese population before the conflict.
Some 41 countries are sending representatives to the CEDRE conference along with officials from the World Bank, International Monetary Fund and other global bodies.
"This support is a means of building a safety wall between Lebanon and troubles elsewhere in the region at a time of huge political uncertainty," said an aide to French Foreign Minister Jean-Yves Le Drian.
The office of French President Emmanuel Macron, who will close the conference, said donors were set to approve an investment plan that would notably pour cash into Lebanon’s creaking infrastructure.
Le Drian’s entourage said the investments would total an initial $10.1 billion ($8.2 billion) over four years, rising to $23 billion over 12 years.
The help, which will include low-interest loans as well as outright donations, goes beyond the $6-7 billion the Lebanese government had previously hoped to raise.
France held mandate power over Lebanon for the first half of the 20th century and Macron has sought an active role in ensuring its stability, intervening after Prime Minister Saad Hariri’s shock resignation in November 2017, a move he later withdrew.
The Paris conference comes as Lebanon gears up for its first general elections in almost a decade in May, after parliament renewed its own mandate three times since 2009.
Cash for reforms
Parliament last week adopted a 2018 government budget, projecting a deficit of $4.8 billion —more than double the deficit in 2011, when Syria’s war started.
Economists say the state urgently needs to reduce its spending to avoid bankruptcy.
But public services such as water supplies, electricity and waste management have suffered huge underinvestment.
"The political idea behind (the investment plan) is that the Lebanese state could be able to provide services and infrastructure to the public, rather than others," an aide to Le Drian said, referring to the powerful Hezbollah Shiite movement.
Macron’s office said Saudi Arabia, widely believed to have pushed Hariri to announce his resignation in November, had sent "positive signals" in terms of whether it will participate in the conference.
Lebanon will for its part sign up to a string of reforms including tougher measures to fight corruption as well as tighter regulation of the transport and telecoms sectors.
It will also have to find ways of reducing a massive budget deficit equivalent to more than 10 percent of GDP.
"Everyone is well aware that these investments will not work unless they are accompanied by major structural reforms," Macrons office said. — AFP