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Khoury: Lebanon Is in Debt, Proposed Solutions Will Not Be Easy

Khoury: Lebanon Is in Debt, Proposed Solutions Will Not Be Easy

Friday, 4 January, 2019 - 10:45
Lebanon’s Minister of Economy and Trade Raed Khoury (Asharq Al-Awsat)
Beirut- Paula Astih
Lebanese officials are preparing to adopt austerity measures and “unpopular” steps after the formation of the new government to cope with the country’s economic collapse, which reached unprecedented levels, according to experts.

After Prime Minister-designate Saad al-Hariri revealed last month that Lebanon was going to reduce fuel subsidies by $600 million in 2019, statements hinted at an understanding among political forces to pursue austerity policy that would undoubtedly increase the growing popular discontent, which was translated into a series of protests in the country.

Minister of Economy and Trade Raed Khoury recognized that the measures, which would be taken immediately after the formation of the new government, would not be welcomed by the people, but stressed that Lebanon was under a difficult economic reality and ought to adapt to the new measures to prevent its explosion.

In remarks to Asharq Al-Awsat, Khoury stressed that Lebanon was indebted and generally non-productive, saying that the proposed solutions would not be comfortable.

Khoury noted that any future economic plan should focus on three sectors: First, stopping public sector employment in parallel with reducing the number of existing employees and their salaries. Secondly, increasing customs duties on all imported goods, since Lebanon’s imports reach $18 billion dollars compared to only $2 billion of exports.

“Therefore, if we raise the fees, we will encourage the local industry and the consumption of locally-produced goods. At the same time, we will reduce the deficit,” he explained.

As for the third sector, the economy minister underlined the need to resolve the electricity crisis, which is causing major squandering of around $2 billion per year, as he said.

Khoury explained that the increase in customs duties on imported goods would undoubtedly include gasoline, but the low prices of oil worldwide would “help us in this area so that citizens will not feel they carry a big burden.”

He noted, however, that all of the above fell within the framework of “short-term measures to help the situation recover, but the final solution is to adopt economic policies that will mainly increase production and create an atmosphere suitable for investors.”

Economic and Financial Expert Walid Abu Sleiman said that austerity measures should be adopted to put an end to the economic deterioration. He noted that those should include lifting subsidies on fuel, stopping employment in the public sector and applying the principle of accountability, even if the concerned authorities were forced to lay off non-productive employees.

Speaking to Asharq Al-Awsat, Abu Sleiman said that the policy of increasing taxes should not be part of the austerity plan, especially as experience has shown that increasing taxes implemented in the 2017 budget was not feasible in light of the shy growth of the national economy. The only solution, according to the expert, was to raise revenues through resolving the public debt service, the deficit of Electricite du Liban (EDL) and the cost of salaries and compensations in the public sector.

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