BEIRUT: The privatization of public sectors would boost economic output and public access to services, Lebanese President Michel Sleiman said Saturday. “We need to think seriously about re-studying subsidies policies in addition to adopting the right privatization methods in some sectors to improve productivity and reduce the burden for citizens,” he said.
This is the first time Sleiman has raised the issue of privatization since he took office almost six years ago.
Observers believe that privatization is not expected to take place this year as Lebanon will be preoccupied with the presidential and parliamentary elections as well as key security issues.
“We need to hasten the adoption of the partnership law between the private and the public sectors while setting the adequate framework for directing foreign and local investments toward services sectors instead of focusing only on bank deposits and the construction sector,” Sleiman added.
The president made the remarks during the Lebanon Economic Forum, which was organized by Al-Iktissad Wal-Aamal Group at the Four Seasons Hotel in Beirut.
Sleiman emphasized the need to adopt sound and bold economic policies with the introduction of comprehensive reforms that would aim at increasing revenues and rationalizing expenditure.
“We should not stick to old economic models which have caused a waste of our natural and human resources in the past,” he said.
Sleiman outlined his belief that the primary means of tackling the economy’s weakness should be the preparation of a solid visionary budget incorporating several sector-specific policies that would complement the fiscal system.
“Such a budget, if implemented, would be the main platform for establishing macroeconomic policies,” he said.
“This is why it is highly important to adopt the legal text that would require an annual revision of the economic situation with the support of the private sector in order to establish a sound foundation for the budget and the management of the public debt.”
In his speech, Sleiman placed great importance on oil and gas exploration, claiming it would open new horizons that could strengthen and consolidate the Lebanese economy and secure citizens’ welfare.
“Economic growth must be coupled with the implementation of social development policies that we have previously adopted, in addition to following up on the development of educational systems and the introduction of administrative reforms that go hand in hand with these steps,” he said.
Other ministers and officials underlined the importance of tackling waste and cutting the huge budget deficit.
Former Finance Minister Rayya Hasan said: “The government should put an end to the deterioration in public finances by curbing futile expenses such as financing Electricite du Liban, which constitutes 50 percent of the budget deficit.”
Hasan also advised the restructuring of public institutions’ services by filling vacant posts and respecting the law.
“Everybody should respect laws and legislations governing the operations of these institutions including ministers,” she said.
She suggested the adoption of procedures that would reduce the financial burden on the private sector to help it overcome this transitional phase.
She also emphasized the importance of working on a clear policy that would tackle the issue of Syrian refugees so as to protect political security and social stability in the country.
“These solutions start by adopting a mechanism for the fund established by the World Bank in coordination with the Lebanese government for receiving international donations and forcing the international community to assume its responsibilities toward Lebanon,” she said.
The United Nations High Commission for Refugees declared less than a month ago that the number of Syrian refugees in Lebanon exceeded 927,000.
The World Bank estimates that Lebanon has lost some $7 billion from the flow of refugees into the country. It also estimates that the total cost of the spillover will shave close to 3 percentage points off gross domestic product growth per year between 2012-14.
Moreover, unemployment is expected to double to more than 20 percent and about 170,000 additional Lebanese will join the 1 million currently living below the poverty line.
In this framework, Hasan proposed to tackle unemployment and to establish mechanisms for creating sustainable job opportunities in order to absorb the increasing number of graduates.
“This is why it is of the utmost importance to motivate non-traditional sectors that can provide an added value for the Lebanese economy such as [the] pharmaceutical, fashion and information technology sectors,” she said.
However, to attain this goal, Hassan underlined the need to provide the necessary funding for the emerging startups and companies.
“This can be possible by subsidizing loans, which is already being done by the central bank since 2013, or by improving the Lebanese stock market,” she said.
Other measures she cited included the preparation of the 2014 budget and its adoption by the parliament and cabinet, in addition to providing financing for important projects that have been pending for years.
In his own speech, Oil and Water Minister Arthur Nazarian urged the government to approve the two main decrees related to the oil exploration file.
“This would allow companies to be able to proceed with their bidding processes to get a share in the oil and gas license round in the Lebanese offshore,” he said.
He also emphasized the need to develop infrastructure if gas extraction was to be successful.
“We should also ensure long term markets for the Lebanese gas,” he added.
Nazarian said the government must continue with the licensing round without any delay so that “we won’t lag behind our ability to exploit our petroleum resources compared to the surrounding states that have had their own gas discoveries.”