Published January 13, 2015
Lebanon's finance minister voiced optimism Thursday that the deal to end the country's political crisis will boost the economy after two years of turmoil that scared away foreign investors and tourists.
Because of the agreement, Finance Minister Jihad Azour predicted economic growth this year will surpass expectations, privatizations will accelerate and thousands of new jobs will be created.
"I can easily say that in the next 12 months, you will see a major turnaround in the Lebanese economy," Azour told The Associated Press in an interview.
Azour spoke at the Finance Ministry in downtown Beirut, just hours after returning to his office for the first time in 16 months. In the interim, he worked from the heavily fortified government headquarters nearby, driven away from his own office after a Cabinet minister was assassinated and the Hezbollah-led opposition staged a sit-in in downtown Beirut that began in December 2006 and ended Wednesday.
The U.S.-backed government and Hezbollah-led opposition sealed an Arab-mediated agreement on Wednesday. It ended the 18-month standoff that paralyzed government and boiled over into the worst violence since the 1975-1990 civil war, leaving at least 67 people dead.
They agreed to form a national unity government and to hold an election for a new president in parliament, six months after the last president left office. The deal was a major victory for the Iranian-backed Hezbollah and its allies, who got their long-standing demand for veto power over all government decisions.
Some of the positive effects from the agreement were instant: stocks and bonds rose on Beirut exchanges on Wednesday. And Azour said he is convinced 2008 economic growth will surpass the 4 percent forecast.
One of the first steps to raise revenue for the government will be the sale of phone licenses. Within months, two state-owned cellular phone companies will sell licenses to private companies who get a monthly fee for operating them. A third cell phone license sale will follow and a landline license will also be sold. Azour said it was difficult to say how much revenue those would bring to the state.
The sale of the licenses had been held up because the opposition had warned the Cabinet not to privatize any company until a news government was formed. Telecommunications Minister Marwan Hamadeh said recently that the cellular telephone licenses will not be sold until a new president is elected
On Thursday, Parliament Speaker Nabih Berri said the legislature will meet to elect army commander Gen. Michel Suleiman as the country's new president at 5 p.m. Sunday. The post has been empty since pro-Syrian president Emile Lahoud's term ended in November.
Two years of instability in Lebanon have scared away foreign tourists and foreign investors. It began with the war between Hezbollah guerrillas and Israel in the summer of 2006, followed by the start of the political crisis in November of the same year when the opposition quit the Cabinet. Last summer, the Lebanese army battled Al Qaeda-inspired Fatah Islam group in northern Lebanon for more than three months.
An opposition sit-in in downtown Beirut for the past 17 months also forced the suspension of hundreds of millions of dollars in projects paid for by local and foreign investment
The political crisis had paralyzed the government, the parliament and other institutions, preventing legislation on economic reforms that would include privatization of other public utilities such as the electric company and increasing the value added tax from its current 10 percent.
The closure of the parliament and resignation of opposition Cabinet ministers in November 2006 made it difficult for the government to go ahead with the reforms or pass new laws.
"Parliament will reconvene and therefore, many of the draft laws that were sent to parliament as part of the government reform program will be approved," Azour said. "This will create a positive sentiment in the market and therefore, confidence will come back."
One of the Lebanon's goals is to reduce the country's US$43 billion debt, which is the equivalent of nearly 175 percent of the GDP, Azour said. Income from privatization will help reduce the debt, he added.
"We were able to reduce in 2007 the ratio of debt over GDP. It is still very high and part of our reform program was in fact to reduce the debt burden on the economy," the minister said.
Azour said the easing of tensions will also accelerate the release of money to the Lebanese government from international donors who pledged more than US$7.6 billion in soft loans and grants during a conference in Paris last year.
Because of the political stalemate, Lebanon did not benefit much from investments from Gulf states that padded their coffers with hundreds of billions of dollars from a boom in oil prices. But Azour hopes some of this money will make its way to Lebanon in the near future.
The investments will come from both Gulf countries and others, Azour said, including Lebanese expatriates, other Arab investors and also foreign countries who hesitated because the country lacked security and political stability.
"Now, there is a positive story to tell about Lebanon," he said.