“Our house is burning and we are looking elsewhere,” the French President Jacques Chirac said, back in 2002 at the World Summit on Sustainable Development in Johannesburg. Lebanon is now burning and we can not look elsewhere anymore. Recent protests on our TV screens prove it. The government has to find quick and tangible solutions. So for a start, Prime Minister Hariri decided to play the card of foreign connections. As often.
Yesterday on October 7, Saad al-Hariri was in the Gulf, seeking investments from the United Arab Emirates to help support its ailing economy, as he said on Monday during his visit to Abu Dhabi, while one of his advisors told Reuters the mood was “positive.”
Hariri’s government has vowed to implement long-delayed reforms to ward off an economic crisis as Lebanon struggles with one of the world’s highest debt burdens, low growth and crumbling infrastructure.
Enhance PPPs between Lebanon and the UAE
Addressing an investment conference in the Emirati capital, Hariri said he sought investments in food, infrastructure, oil and gas, and renewable energy.
“We are here to enhance public-private partnerships between Lebanon and the UAE,” Hariri told the conference, where he was leading a delegation to help strengthen economic and trade cooperation.
Asked if the UAE would be providing financial support, Ghattas Khoury, an advisor to Hariri, told Reuters the mood was “positive” and there would be a meeting between the Lebanese premier and UAE authorities later on Monday.
Lebanon is preparing to sell a Eurobond of around $2 billion this month, with cash raised earmarked for refinancing maturing debts and shoring up shaky public finances.
The country’s traditionally high reserves of foreign currency have been in decline because capital inflows into its banking system from Lebanese abroad have been slowing.
Beirut has said it hopes Gulf allies or regional sovereign wealth funds will offer support but no public pledges have so far been made. On Oct. 1, Moody’s put Lebanon’s Caa credit rating under review for downgrade, saying anticipated external financial assistance had not yet been forthcoming.
UAE Economy Minister Sultan bin Saeed Al Mansoori told the conference the UAE was ready to be economic partners with Lebanon.
Hariri said Lebanon will have to undertake economic reforms and wants to work closely with the UAE to reach the stage of development seen in Abu Dhabi and Dubai.
Ratings agency Fitch downgraded Lebanon to CCC in August, citing debt servicing concerns. At the same time, S&P Global affirmed Lebanon at B-/B with a negative outlook, saying it considered foreign exchange reserves sufficient to service government debt in the “near term”.
Seeking for help abroad as Saad al-Hariri just did could be a temporary solution. As often. But what next?
