News from Beirut September 29  1997 ...Search

Lebanese officials opt to dialogue

Following the crisis that loomed in Lebanon as a result of the cabinet's rejection of Prime Minister Hariri's development plan last week, the political atmosphere here seemed to have opted to dialogue as a way to resolve Lebanon's economic and financial problems.

In fact, two basic developments seemed reason enough to pave the way for this option: First, the visit to Damascus by House Speaker Nabih Berri, who has been instrumental in knocking out Hariri's plan; and, second, the linkage yesterday by Hariri between implementing the $800bn plan, the provision of the necessary revenues and funds, and the reduction of the budget deficit.

It seemed obvious those two developments were behind commencing a week of a "calm and open dialogue", as Hariri said, with a meeting by the Parliament's Finance and Budget Committee, upon the suggestion of  Speaker Berri. Aiming at rationalizing expenditure and halting squandering, the meeting was readily welcomed by Prime Minister Hariri provided "all with no exception will abide" by the practical measures arrived at during this dialogue, which is expected to include on Wednesday representatives of Lebanon's economic sectors.

In the same context, the four-hour meeting Speaker Berri had yesterday with the Syrian President Hafez Assad, was contributory to the impression here in Beirut that the recent political complications are heading to a solution. Yet political circles did not exclude the possibility that Lebanon's presidential elections were discussed during Berri's talks in Damascus, especially in light of the recent announcement by Hariri that an extension of Hrawi's term in office is not possible.

It was also observed that, following his return yesterday evening to Beirut, Berri immediately visited President Hrawi and briefed him on the talks he had with President Assad, Vice President Khaddam, Army Chief of  Staff Hikmat Shehabi, and the Chief of Syrian Army Intelligence Major general Ghazi Kanaan.

The meeting with President Assad, Berri later announced, was devoted to discussing "Arab, international and Lebanese issues, the outcome of the visit by the US Secretary of state Madeleine Albright to the region, the situation in south Lebanon, and Lebanon's internal affairs, including the recent developments".

Hariri ties plan to revenues and deficit reduction

Prime Minister Hariri, speaking to reporters at his residence on Sunday, expected a "calm and open dialogue" to commence between the Lebanese officials with regard to the impending economic and social situation, and affirmed that "everyone is dealing with this issue positively".

He said, "there is even a consensus on the subject of gasoline which was not absolutely rejected, but the matter was one of timing".

On the subject of the $800m plan, Hariri announced that "when the needed revenues are provided and the budget deficit is reduced, we will proceed with $800m plan, which cannot possibly be initiated without providing the funds necessary for financing it".

Specifying for the first time the framework of the 1998 fiscal budget, which the Cabinet will begin discussing and approving as of tomorrow in preparation to submitting it to the Parliament before the constitutional date of October 15, Hariri affirmed that "the budget will be issued on time, and within a budget deficit appropriate to what the situation in Lebanon permits". He said, "the deficit rate will be much lower than the one realized in 1997", adding that "between revenues and expenditures, there will be margin which will be strictly observed, and any increase in expenditures will have to be accompanied by a corresponding increase in revenues, so as to keep the margin fixed no matter what happens".

Viewing that what has lately happened has opened the door for reviewing everything, Hariri spoke about the revenue system and "the necessity of developing it and reviewing the way taxes are collected". He said, "even if the $800m plan were approved, stabilizing the economic situation would not have been attained without implementing a group of measures to activate and generalize tax collection, and curb squandering. And, though we are aware of the political pressures preventing this step, all must face the responsibility, and we all are doing what we can in this respect".

Expecting squandering to be the subject of discussions during today's meeting of the Parliamentary Finance and Budget Committee, Hariri distinguished between two methods of squandering: "Negative squandering which means that taxes are not collected basically because of the law itself, and positive squandering which is direct and begins with stationary for instance". The issue as a whole, he said, "requires a more effective administration and a better supervision, taking into consideration that squandering cannot be completely eliminated, but the important thing is our ability to reduce it".

As to the reasons of the current budget deficit, Hariri specified four:  inefficient collection of electricity bills, teachers' payrise, deficiency in collecting taxes as a whole, and public health expenditures".

Administrative reform, he said, "was never a subject of controversy. The important thing is to find the mechanism".

Pointing out that fees on telephones have brought the State an amount exceeding expected returns by $150m, Hariri stressed the necessity of  collecting electricity bills, "which requires great efforts, is not an easy matter, and could make a considerable difference to revenues". He also pointed out that income tax collections have increased by 25 percent this year, and "this is not minute".

He also re-emphasized the necessity of increasing national production in a way parallel to every increment in public debt, saying, "this could be achieved through encouraging investments in all productive fields".

Tourism, he said, "is one such way as it could render a quick increase to income, and can open the way for gigantic investments". He also called for "benefiting from the wide desire of Arab Gulf citizens to visit Lebanon, and reside in it for a long time".

On the decision taken by the Union of Lebanese Hospitals to bill patients directly, Hariri described the move as a "big mistake", noting that "debts due to hospitals have been there for a long time, and the State will not eat up these funds. We have informed them of this viewpoint, especially since it was not becoming of them to act this way when a cabinet meeting ends in not approving these dues".

Finally, Hariri warned against "playing again with the currency", saying, "this is not a solution and does not lower the deficit. On the contrary, it creates a state of large inflation that would increase interest rates. Debt can go down in a moment, but we will find interest on this debt increasing tremendously. This would bring us to the same circle again, but with an additional amount of debt. It is something we will not allow, as it has no justification, and we shall use all legitimate means to maintain financial stability and economic growth".

Concluding, Hariri said, "we shall not commit ourselves to any expenditures without having equivalent revenues in return. There is no way other than increasing revenues by all possible means. Augmenting gasoline prices and custom duties is not enough. Even the proposed plan itself will not be enough."

Leaving to Rome, Sfeir repeats call for independence

Maronite Patriarch Cardinal Nasrallah Butros Sfeir, leaving yesterday to the Vatican to participate in the Synod for Asia, called on "all the Lebanese to shoulder their responsibilities", affirming "this was their right" and said, "those who do not believe in that are languorous, and do not want their country independent".

"We are with those who call for Lebanon's independence, sovereignty and free resolve", he said.

Reacting to a wave of criticism subsequent to a statement in which he denounced Syrian presence in Lebanon, Sfeir said, "we were clear in this respect. We have repeatedly said that if this country is to shoulder its responsibilities by itself, then all non-Lebanese living in Lebanon should let the Lebanese run their own affairs".

"As to the statement on which many have recently commented, we would like to say that we have said the truth, Sfeir said. "And we do not believe saying the truth in Lebanon is prohibited".

Lebanon's forex on hold

In the wake of the Cabinet's rejection of Hariri's development plan last Wednesday, Lebanon's foreign exchange market was overwhelmed with worry and pessimism. Press reports said this could have adversely effected the Lebanese Pound's rate of exchange, hadn't Prime Minister Hariri quickly moved into putting things in place through calling for dialogue, denying having any intention to resign, and expressing his resolve to shoulder his responsibilities.

As a result, calm returned to the foreign exchange market before the weekend, but without that helping to revive full confidence, pending the outcome of the upcoming dialogue between the supporters and the opposers of Hariri's development plan.

Meanwhile, no extraordinary transactions were made against the Lebanese Pound, despite the fact that some moved to the dollar as a matter of precaution since mid last week.

Sports Round Up

Tadamon tops Lebanon's 3rd phase football championship

During third phase of the Lebanese football championship-Dawri 38 last Saturday and Sunday, Tadamon Sour moved into first place after overcoming Bourj at Saida, earning at the same time the best achievement of the league.

In the six matches played, the following results were recorded:

1- Nejmeh played against Aahed, scoring 0-0, at the Bourj Hammoud Stadium

2- Ahli Saida played against Akhaa Aley, scoring 0-0 at the Saida Municipal Stadium.

3-Riyada Wa Adab played against Homenmen scoring 2-3 at the Rashid Karami Municipal Stadium in Tripoli. Scorers: Deghli (22), and Abbouchi (62) for Riyada Wa Adab. Keghic (5), Helou (30) and Najem (40) for Homenmen.

4-Homenmen played against Chabab Sahel, scoring 5-0 at the Nadi Safa Stadium in Wata Al Mseitbi. Scorers: Terro 3 (1,14,61), Vartan (29) and Esteban (89). Scorers: Mahfouz (86).

5-Sagesse played against Safa, scoring 1-1 at the Bourj Hammoud Stadium. Scorers: Sergui (87) for Sagesse, and Wassef (71) for Safa.

6-Tadamon Sour played against Bourj, scoring 1-0 at the Saida Municipal Stadium.Scorer: Mahfouz (86).

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