Hamade warns new government must prove itself

The three-week old government should stick to its 2003 fiscal target, cut product costs, and work on administrative reform, Economy and Trade Minister Marwan Hamade said Friday.

Speaking to participants at an economic conference in Beirut, Hamade outlined a series of government action needed to win over ambivalent citizens who have questioned its credibility.

“The benchmark of the government’s success or failure is surely our actions, two months from now,” said Hamade at a conference organized by Data-Investment Consult in Beirut.

Hamade said the government has to tighten fiscal spending to stick to its 2003 target of a budget deficit falling 25 percent of expenditures, which was overshot in the first quarter.

“For sure, the government should not exceed its 25 percent fiscal deficit target, if we are to respect the commitments we made at (the financial donor meeting) ‘Paris II,’” said Hamade, referring to last year’s November meet that garnered Lebanon $4.3 billion in long-term soft loans.

“Since we overshot the target in the first four months, the finance minister will have to rectify the situation, not by raising more taxes, but by tightening spending and cutting down on squandering.”

Hamade said the government should try to glean the remaining financial benefits of Paris II, which have not been complemented by speedy sale of state assets nor a significant drop in interest rates.

Hamade, who served as minister for the displaced in the former Hariri government and the posts of tourism, health and economy ministers over the last decade, said he intends to carry on resolving economic problem lingering from past years.

“I want to finalize the insurance problem, hold the first Euro-Med workshop in Brussels and meeting with World Trade Organization officials in Cancun Mexico this year,” Hamade said.

The minister also emphasized the need to entwine financial reform with administrative and economic reform that guarantee the smooth flow of work for the struggling private sector.

Primarily, the government could work next on economic reform by cutting steep production costs that cripple Lebanon’s private sector.

Hamade, in reply to a question about Lebanon’s inability to get a discount oil price from Arab countries on par with Jordan, said political pressure has also deterred Lebanon from cutting its production costs.

“Personally, I think Jordan managed to get such a discount price for political reasons, primarily for its stances in both Gulf wars,” said Hamade.

“Lebanon has paid for its stances and pressure has come to bear on it from foreign countries via some of their satellite Arab states.”

Under the former Iraqi regime, Jordan imported half of Iraqi oil for free and the other half at a discount. Recently it reached an agreement from Saudi Arabia to get cheap oil.

Hamade said he is optimistic the newborn government will succeed in pushing economic growth due to its political mix.

“In the former government, we reached a desperate state in debate which impeded us from improving the economic situation,” said Hamade. “This government may have a higher dose of politicians, but it also has a higher degree of harmony and debate,” he added.





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