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Mon 21 May 2007 12:38 AM

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Lebanon: politics threatens reform

Government admits that the country's current political stalemate could jeopardise economic reforms.

The Lebanese government may have trouble pushing ahead with economic reforms due to the country’s political standoff, it has admitted.

In a letter to the International Monetary Fund (IMF) released last week, the government said some of the reform bills needed the approval of parliament, hinting this could prove difficult in the current climate, the Lebanon Daily Star reported.

“Some of the measures that are laid out in this request are subject to the settlement of the current political stalemate and approval by parliament,” the letter stated.

“Given the sensitive nature of these measures, particularly in light of the destruction caused by the war and its social consequences, they are also contingent upon an internal consensus in the country.”

The planned reforms, for which the IMF provided Lebanon with a $77 million soft loan in April to help implement, are aimed at cutting spending, increasing revenues and modernising the public sector. The reforms include privatisation of the telecoms and electricity sectors.

The government has previously estimated it could make up to $6 billion by selling off Lebanon’s two state-owned mobile networks, which would go some way to reducing the country’s $41 billion public dept.

In the letter, the government stated it would submit the draft law authorising the sale of the mobile sector at the end of June, but concerns have been raised as to whether the law will be passed due to the political situation.

Nabih Berri, speaker of the Lebanese parliament and opposition member, has refused to call session and will not receive any documents referred to parliament by the majority government.

In relation to the electricity sector, the government plans to audit the state power company, Electricite du Liban, at the end of June.

The IMF has sent a team to Lebanon to assess its progress and is scheduled to release a statement on the government’s progress, including a projection of growth in gross domestic product (GDP) for this year.

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