BEIRUT: Political feuding delaying the formation of a new government in Lebanon will have a negative impact on the country s already shaky economy, Finance Minister Mohammed Shatah warned on Friday.
The inability to take decisions… and the delay in forming a government will have a direct negative impact on the economy, Shatah said at a joint news conference with Domenico Fanizza, the International Monetary Fund s head of mission in Lebanon.
On Wednesday President Michel Sleiman asked Saad Hariri to try again to form a cabinet, a week after Hariri stepped down in frustration over more than two months of fruitless talks with the Shiite Hezbollah-led opposition.
Hariri s Western-backed coalition won a general election on June 7, but his efforts to form a new national unity cabinet have been stymied by squabbling over who would head each ministry.
Shatah said the delay will also influence investor confidence. Lebanese and foreign investors will not be encouraged to invest in sectors which rely on a solid state.
A United Nations Conference on Trade and Development (UNCTAD) report on Thursday said that foreign investment in Lebanon rose 32 percent in 2008 with oil-rich Saudi Arabia topping the list of investors.
Last year Arab states accounted for 90 percent of foreign direct investment (FDI) in Lebanon, with 63 percent from Saudi Arabia alone.
Friday s news conference was to launch an IMF Emergency Post-Conflict Assistance (EPCA) report on reforms undertaken in the two years since the devastating 2006 summer war between Hezbollah and Israel.
Fanizza welcomed the reduction of the debt-to-GDP ratio from 180 percent two years ago to 150 percent in 2009.
But this is just the beginning — 150 percent is a very high percentage, among the highest in the world, he said of the energy sector, the third largest drain on public finances after debt repayments and public salaries.
According to official estimates, Lebanon s public debt is expected to be nearly 50 billion dollars at the end of 2009.
Lebanon has also largely weathered the global economic crisis thanks, in part, to its solid banking sector.
The IMF estimates that the economy will grow by seven percent in 2009. – AFP
