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'Lebanese economy on brink of collapse'

DUBAI — Lebanon's war ravaged economy is on the brink of collapse, said Sami Haddad, Lebanon's economy minister in an interview on the BBC yesterday.

As the heavy bombardment of the country in its fourth week, the direct damage to the country's infrastructure is estimated at $3.5 billion upwards while the reconstruction costs, according to analysts are likely to exceed $5 billion.

The war has hit Lebanon's key economic sectors such as tourism and agricultural exports hard. The conflict has almost wiped out Lebanon's tourism industry. Tourism accounts for about 15 per cent of the Lebanese economy, and had risen 50 per cent in the first half of 2006.

The government had hoped the country would draw in a record 1.6 million visitors this year, bringing in about $2.5 billion in foreign exchange to the economy.

“We have completely missed this year's tourist season. Confidence is a huge factor in the Lebanese economy. We depend a lot on tourism, and now that's been knocked, it could take years to come back,” the minister said. Speaking about the collateral damage, Haddad said apart from the damage to the physical structures, the conflict has severely damaged the country's environment and in financial terms could amount to several billions of dollars.

Even if there is an immediate ceasefire, it will take at least two to three years to get the economy back into its feet.

Haddad welcomed international contributions, particularly those from Saudi Arabia and Kuwait that helped the economy to remain stable during the first few weeks of the war. While Saudi Arabia deposited $1 billion in soft loan it provided $500 million towards reconstruction of the country.

Kuwait along with other Gulf states together have contributed another $500 million.

“Financial aid in all forms are welcome. We need more to rebuild the economy,” Haddad said.

Lebanon, already saddled with a public debt of about $40 billion, or 180 per cent of GDP, will have to rely solely on foreign donations to rebuild.

“We need a stabiliastion force in the country. We cannot rebuild the country if we are under constant threat of attack by the most formidable army in the region," Haddad added.