Investment plans disclosed by Lebanese Prime Minister-designate Saad al-Hariri’s aide underscores Lebanon’s plan to channel resources into its economy and peacetime development.
Earlier this week, Nadim Munla, a senior adviser, told an investment conference in London that Hariri will present this optimistic outlook for Lebanon, which is placed in a region ravaged by conflicts which include Syria, Yemen and Iraq.
“If you look at it now, it looks bleak, but if you go into the medium- and long-term, we still believe the region is suffering from fatigue, fatigue of war, and there is really more serious talk about the period after,” said Munla with regard to Lebanon in the context of Hariri’s investment plans for the country.
Regional turmoil has taken its toll on Lebanon’s economy and has contributed to spasms of political paralysis. Although six months have gone by since the elections, neither the opposition nor the winning party has been able to hammer out the creation of forming a government.
As a result, annual growth rates have slumped by 1% and 2% from their earlier growth rate of 8% and 10% in the four years before the eruption of the war in neighboring Syria. Hariri’s investment plans could play a pivotal role in halting this economic slide and nudge the economy in a forward direction.
Backing Hariri’s focus on the local economy are major regional factors, which are likely to play a supportive role, which includes the stabilization of the frontlines in Syria; on a cautionary note however, the war is far from over since large areas are still outside of state control.
The other supportive factor that is likely to positively impact Hariri’s investment plans for Lebanon is that U.N.-sponsored talks are pushing for the end of the four-year-long war in Yemen.
Lebanon aims to attract private sector investment in its $17 billion capital investment program, which is at the heart of Hariri’s economic revival plans for Lebanon. The London roadshow is aimed at garnering investments towards that goal.
“The prime minister is going to have a very clear message that in spite of the hiccups … the outlook looks bright, that this is a region of growth where there will be a lot of business in the future,” said Munla regarding Hariri’s investment plans for Lebanon.
He went on to add, “When less money is going to the war in Yemen, more money is to go into projects and economic activity. We believe that there will be a shift in the allocation of resources … from wartime to peacetime and that’s an opportunity for Lebanon.”
So far Lebanon’s investment plans won aid pledges which exceed $11 billion however donors want the government to first tackle Lebanon’s public debt which is the third largest in the world as a percentage of GDP.
The push towards economic reforms are facing some headwinds, especially from its heavily subsidized power sector and they have largely been put on hold as the current focus is on government formation.
“If the government is formed and the capital investment program starts kicking in, we expect growth rates above 5 percent,” said Munla while adding, as a fallback, the country’s economic growth would continue chugging at its 1% to 2% rate.