World Economy

France Pledges $672m in Aid to Lebanon

Saad Hariri (L) and French FM Jean-Yves Le Drian at the Cedar Conference in Paris on Friday.Saad Hariri (L) and French FM Jean-Yves Le Drian at the Cedar Conference in Paris on Friday.

Lebanon›s prime minister called for international help on Friday to cope with the impact of war in neighboring Syria, and France responded with a pledge of €550 million ($672 million) in grants and loans.

More than one million refugees have fled to Lebanon during the seven years of war in Syria, Saad al-Hariri said at a conference of potential donors in Paris, and economic growth has collapsed to less than 1% a year from an average of 8%, Reuters reported.

“In this effort, Lebanon cannot succeed alone,” Hariri said. “It needs the support of the international community, he said, calling for “a clear and concrete indication of this support in the form of grants and concessional loans...”

In a nod to demands for reform, he pledged fiscal consolidation to reduce the budget deficit—more than 150% of gross domestic product at the end of 2017—by 5% during the next five years.

The Lebanese Parliament last week passed a 2018 budget that projects a narrower deficit than in 2017. Standard Chartered, in a research note, called the budget a “positive sign”.

The Paris conference, convening 50 countries and organizations, including Saudi Arabia, United States, Russia and Qatar, is expected to set up a follow-up mechanism to track progress towards reform.

The International Monetary Fund said in February that Lebanon›s fiscal policy needed a consolidation plan that stabilized debt and then begin to reduce it.

Diplomats have said Lebanon›s success in attracting international support from donors and the private sector will hinge on reforms.

“Lebanon needs significant investments to upgrade its basic infrastructure, which today no longer allows it to provide all these citizens with essential public services in good conditions,” French Foreign Minister Jean-Yves Le Drian said.

“On the other hand, Lebanon needs major reforms of its economy, structural and sectoral,” he told the conference. He said France would provide €400 million in concessionary loans and €150 million in donations.

Lebanon, which is still rebuilding from its 1975-90 civil war, is seeking investment in roads, power generation and public transport. Of the initial $10 billion it hopes to attract, it is seeking one third from private sector investment and the rest from grants and concessional funding.

Add new comment

Read our comment policy before posting your viewpoints