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News :: Globalization
Lebanon: loans with World Bank, EU
by Daily Star
11 Sep 2007
The Lebanese government signed several loan agreements with the World Bank and the European Union on Friday to help the reform and reconstruction efforts. Prime Minister Fouad Siniora, who attended both signing ceremonies at the Grand Serail, underlined the importance of implementing reforms on time.
Lebanon signs loan deals with World Bank, EU to help reform, reconstruction
Siniora stresses importance of timely implementation
By Osama Habib
Daily Star staff
Saturday, September 08, 2007
BEIRUT: The Lebanese government signed several loan agreements with the World Bank and the European Union on Friday to help the reform and reconstruction efforts. Prime Minister Fouad Siniora, who attended both signing ceremonies at the Grand Serail, underlined the importance of implementing reforms on time.
"We cannot put time in the freezer and then assume that everything is fine," Siniora said, alluding to the time wasted since the Civil War started more than 32 years ago.
He added that Lebanon wasted many opportunities as a result of wars and conflicts, noting that the government achieved many things since the convening of Paris III donor conference.
"We are now looking at a lot of things that were implemented over the past few months since the Paris III conference, but as you know there are many bills that need the approval of the Parliament," Siniora said.
The donor states pledged $7.6 billion in soft loans and grants to allow the government reduce the public debt, implement reforms and stimulate the sluggish economy.
But many of the reform proposals require the approval of the Parliament which is currently inactive due to the sharp differences between Parliament Speaker Nabih Berri and March 14 politicians.
There is growing concern that the current government may not be able to keep its promises to the international community if the political crisis takes a turn for the worse.
Should the situation deteriorate further after the presidential elections, one of the first casualties will be the privatization program, one of the key reforms mentioned in the five-year plan submitted to the donor states.
Privatization, according to officials, should generate more than $5 billion and this money will be used to reduce the $41 billion public debt.
Siniora again highlighted the problems of electricity which is one of the main sources of waste.
The World Bank package consists of two grants and a long-term loan.
The grants are funded by the $70 million pledge by the World Bank in 2006 in the aftermath of the Israeli war on Lebanon.
The Reform Implementation Development Policy Loan (RIDPL) allocated in the energy sector comes from a $700 million financial pledge made by the World Bank at the Paris III conference that was held on January 25 of this year.
The agreements were signed by Finance Minister Jihad Azour and World Bank Regional vice president, Middle East and North Africa, Daniela Gressani.
The first World Bank loan, worth $100 million, will support key reforms under the three pillars of the government's overall modernization program, fiscal adjustment, growth enhancement and social-sector reforms.
The second $1 million grant is designed to accelerate and improve the implementation of a package of social reforms, including social security, health and social safety.
Part of the money will be designed to carry out necessary reforms in the National Social Security Fund and public health.
The third grant, worth $338,000, will be allocated to the Finance Ministry to modernize public financial management systems.
Azour made a presentation to the World Bank officials, highlighting the major achievements of the Finance Ministry.
According to the progress report in the first seven months of 2007, over $3.4 billion were received by the government from the donor states.
In addition, another $900 million is expected to be finalized by the end of the year.
Earlier in the day, the government singed seven loan agreements with the EU valued at 74 million euro ($101 million).
The soft loans will be used for reforms and reconstruction.
The EU has allocated 50 million euros to help in the reconstruction of villages and towns damaged by Israeli attacks.
EU officials said that all the details of these loans will be made available in web sites.
Lebanon has already spent more than $444 million to rebuild the southern suburbs, villages and infrastructure.
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