Nahas: New Cabinet would expedite donor funds

People walk outside the International Monetary Fund headquarters at the start of the annual IMF-World Bank fall meetings in Washington, October 8, 2013. (REUTERS/Jonathan Ernst)

BEIRUT: The creation of a new Cabinet in Lebanon would encourage the donor states to speed up their financial assistance to the country to help it cope with the influx of Syrian refugees, caretaker Economy and Trade Minister Nicolas Nahas said Thursday.

Nahas, who attended the World Bank and International Monetary Fund meetings in Washington this week, said his talks with U.S. and European officials were very positive, but declined to say if the donor states had pledged a specific amount of money to Lebanon.

“We have sensed during our talks that an agreement between the Lebanese to create an effective government would have a major impact on the friends of Lebanon to help it overcome the negative effects of the Syrian crisis,” Nahas said, in an apparent reference to further potential donor aid.

Caretaker Finance Minister Mohammad Safadi has been having separate talks with the presidents of the IMF and the World Bank in the U.S. capital.

Safadi said earlier this week that his ministry was not willing to borrow money from the local market just to cover the extra expenses arising from the presence of 1.3 million Syrian refugees in Lebanon.

Lebanon fears that the budget deficit may exceed 27 percent at the end of this year if the caretaker Cabinet continues to allocate funds toward providing for Syrian refugees.

Nahas said the problem of the Syrian refugees should not rest on the shoulders of Lebanon only, stressing that the issue had become a regional and international problem.

He added that the creation of a new Cabinet could only have a positive impact on the country because the donor states would be more encouraged to funnel cash to Lebanon.

Western donor states argue that a caretaker Cabinet cannot legally handle the large amounts of money that would be sent to Lebanon.

The U.S. Embassy told The Daily Star this week that there were “concerns about the ability of a caretaker government to take decisions on allocating funds directly given to it by donors.”

It said assistance was ongoing to non-governmental organizations and municipalities and that U.S. officials “are looking for new ways to fund aid ... to ensure the assistance is coordinated and reaches the most pressing needs.”

Various Arab countries at the Washington talks also expressed unwillingness to send further money unless a new Cabinet was formed.

There is deep concern among political and business circles that the formation of a new Cabinet may not take place soon due to the deep divisions over the structure of the government.

Some economists warn that if the pressure on the Lebanese Treasury mounts, then the Finance Ministry and the Central Bank may be obliged to borrow more money by issuing new Treasury bills and Eurobonds.

If this happens, then the public debt this year could rise above the original target. Safadi earlier projected the public debt would reach $61 billion.

A version of this article appeared in the print edition of The Daily Star on October 18, 2013, on page 5.




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