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Lebanon eyes third donors' conference

BEIRUT - Prime Minister Rafiq Hariri said yesterday Lebanon was planning for a third world donors' conference next year, after having completed reforms needed to put a "final end" to deficit and debt crises.

Hariri noted the urgency of carrying out the long-overdue reforms in order to hold a donors' conference in Paris in the second half of 2005, provided he stays in power after presidential and legislative elections.

"We are fully confident that if we can gather national agreement over the reform programme we will be able to confront our financial problems and achieve economic growth starting in 2005," Hariri said at the opening of a conference of Arab finance ministers in Beirut.

"And this will allow us to prepare for the holding of Paris III in the second half of next year to put a final end to the deficit problem and the rise of the public debt," he said.

Hariri said "we believe that we still have a chance to resolve our financial problem and strengthen our economic situation through the reforms that we need and which we could not implement for internal political circumstances."

He was referring to ongoing disputes among the country's political leaders, notably between Hariri and President Emile Lahoud, which have blocked moves towards privatisation in particular.

Lebanese Finance Minister Fouad Siniora later told AFP that "any Paris III conference is pending the implementation of previously planned reforms, including those of the Paris II conference."

Asked how urgent was the need to implement such reforms Siniora said they should have been done "yesterday."

Agustin Carstens, deputy managing director of the International Monetary Fund which was jointly organising the conference, said "much remains to be done to place Lebanon's public finances on sound footing."

He however noted that "I believe Lebanon has important lessons to share with the region and with the international institutions present here."

"A clear example is the value-added tax (VAT), which in just two years has reached tax efficiency levels rivaling those of industrial countries," he said, before adding "this is not to say that Lebanon's fiscal reform agenda is complete."

Saleh Nsouli, IMF deputy director for the Middle East and central Asia department, also said "the effort that Lebanon has made on reforming the structure of the tax system, particularly the successful introduction of the value-added tax, provides important lessons of what can be achieved."

Since it was introduced two years ago, the VAT has helped the state face its deficit problems, with revenues from the tax representing more than 20 per cent of the total proceeds of the government in 2003.

Lebanon's economy remains in trouble with a public debt of $34 billion, or 185 per cent of the country's GDP.