November 24, 2002	Sunday	Ramazan 18, 1423

PARIS, Nov 23: Lebanon obtained more than $4 billion in credits for its debt-plagued economy at a key donors conference here on Saturday, the office of French President Jacques Chirac, who hosted the talks, said.

Saudi Arabia was the main donor, promising $700 million, followed by France, the European Investment Bank, the Kuwait Investment Bank, and the Arab Development Fund all of which pledged $500 million each, a source said.

Other pledges came from Kuwait, the United Arab Emirates, and Malaysia which all offered $300 million, and Italy, Canada and Bahrain at $200 million each.

Japan and the Arab Monetary Fund agreed to $100 million each, Belgium $70 million, and Oman $50 million.

However the United States — which last week urged Beirut to strike a deal with the International Monetary Fund — plus Germany and Spain meanwhile refrained from making any immediate commitment.

The French statement said that “several participants showed willing to contribute to Lebanon’s financing at a later date, in the light of progress made and the deepening of its relations with the IMF.”

Lebanon had said it hoped to raise $3 to $5 billion — equal to what the government hopes to gain from a planned privatization of public services — through a combination of grants and loans at preferential rates.

Lebanese Prime Minister Rafiq Hariri, who attended the talks, has been seeking to avert draconian reform plans by the International Monetary Fund (IMF).

He urged donors to allow his country’s ailing economy “to enter a virtuous circle”.

Lebanon’s public debt would hit “about $31 billion at the end of the year” and servicing the debt, which had undermined efforts to slash government spending, had become “unbearable”, he said.

The meeting, dubbed “Paris II” after a similar conference which took place in 2001, brought together leaders from 17 states and major international financial institutions from Europe, North America, southeast Asia and the Gulf.

Hariri said the aid would contribute to stability in the volatile Middle East region.

The donors “were betting on the future”, and the aid and Hariri’s proposed reforms “should give positive results,” he said.

Chirac called for a follow-up conference in six to nine months to assess progress.

“If there is to be a war (in Iraq), the efforts would be in vain everywhere... We must act with the hope that we will manage to impose peace, stability and development,” Chirac said.

Hariri’s government has drawn up a report in which it insists it can deal with its financial crisis if it can secure long-term loans of 10 to 15 years, and lower interest rates than the 12 per cent a year it is currently paying.

The report argues that this would bolster investments, spending and help create badly needed jobs in Lebanon.

In exchange, the government would staunchly pursue a programme of political and economic reforms and take measures such as the introduction in February of a value added tax.

Hariri told donors on Saturday that “Lebanon vows to respect the programme of economic reforms” presented at the conference. Lebanon spends more than $3 billion annually to service its debt, and this in turn represents half of its budget or 18 per cent of its gross domestic product.

Without the relief funds, Beirut has said it would be forced to default on debt payments in 2003.

IMF and other financial experts have cast doubt over Lebanon’s ability to manage its deficit without devaluing the Lebanese pound or making drastic cuts in its inflated public institutions.—AFP