Lebanon needs to spend USD 20 billion to improve its basic infrastructure


EIRUT: Lebanon needs to spend at least $20 billion to improve its basic infrastructure otherwise the high growth the country has been witnessing will “dwindle and vanish,” the economy and trade minister said Wednesday.

Lebanon is renown for its robust service-oriented sectors, but many investors are discouraged from setting up businesses in a country where power cuts are frequent, road networks beyond the capital are insufficient and communication lines are slow.

The 8 percent average growth Lebanon has seen for the last three years was mostly driven by consumer confidence after Qatar mediated a peace accord between the country’s rival political parties in May 2008, which created a national unity government.

Guns fell silent, tourism soared and Lebanese expatriates returned, but the government has been unable to make any major investments to support the service-driven economy because of difficulty in getting major policy decisions passed.

“Today, our main problem against future growth is basically the infrastructure and if we do not sort out the infrastructure, this growth that we’re witnessing today is going to dwindle and will vanish,” Mohammad Safadi told the Reuters Middle East Investment Summit.

“The growth that we have witnessed is more goodwill for the future rather than a real, integral growth in the economy itself,” he said.

Safadi said improvements were needed in the areas of electricity, water, communications and roads.

“You’re not talking about less than $20 billion … to get these areas to basic [levels]. We’re not talking about expansion needed for the future, just to cope with demand today.”

A total of $4 billion has been earmarked for infrastructure investment in the 2010 and 2011 budgets, neither of which have yet been ratified by the Parliament because of ongoing political wrangling.

If the budgets are ratified, Lebanon expects to spend $1.2-1.3 billion on expansions and improvements to electricity and water networks, $300-400 million on roads and the rest on communications, Safadi said.

The minister said he hoped a draft law on public-private partnerships would be approved within three months, opening the way for the private sector to enter the market.

Safadi said a train network connecting at least Lebanon’s north-south coastal strip would go a long way toward opening up investments in various parts of the country, rather than concentrating it on Beirut and the immediate areas around it.

“At the end of day we have to treat Lebanon as one economic unit and with that … it really opens up big new opportunities to invest in different areas of Lebanon.”

He also said the government was committed to decreasing the cost of doing business in Lebanon, although it was “not at the pace we’d like to see.”

According to a 2009 World Bank “Doing Business” report, Lebanon ranks as one of the most expensive countries in the Middle East and Africa to start a business, with only Yemen, Iraq and Djibouti ranking below.

It costs 87.5 percent of the country’s per capita income to start a business – a higher proportion even than in Gaza and the West Bank, where it costs about 70 percent of income per capita. Overall Lebanon ranks 108 out of 183 countries in ease of doing business.

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(The Daily Star :: Lebanon News :: http://www.dailystar.com.lb)