IS THERE A PLAN TO STABILIZE OR REDUCE THE PUBLIC DEBT?

Is there a plan to stabilize and/or reduce the Public Debt?

During the past three years the Public Debt has risen as follows (see MOF yearly returns):
•Year 2004 53,129 billions of Lebanese pounds or 35.4 billion US dollars
•Year 2005 55,983 billions of Lebanese pounds or 37.3 billion US dollars
•Year 2006 60,566 billions of Lebanese pounds or 40.3 billion US dollars

In the words of Dr. Marwan Iskandar, in the article that he wrote on Sunday 24/6 article in An Nahar, this Public Debt means that every single Lebanese citizen (men, women and children) owes today the equivalent of $10,000. This also means that an average family of five owes a total of $50,000. This debt will inevitably climb to $66,000 in 2011 (only four years from now) and to $100,000 in 2016, unless something is done to halt the interest ballooning process.

The citizens of this country are legitimately entitled to ask what is being done to remedy this disastrous situation.

In their Paris III Recovery, Reconstruction and Reform Program, the Authorities reassure us by projecting that the Gross Public Debt will not exceed 44.7 billion US dollars in 2011, “without foreign assistance”.

However, they have not explained, in simple terms, how this figure was reached. The information that they present in Box 6 of page 27 (Macroeconomic Scenario) does not sufficiently describe the measures that the government intends to take to reach this result. For our part, we remain convinced that, unless some drastic action is taken ASAP (as soon as possible) with regards to every item of the National Budget, the Public Debt is bound to reach $66 billion in 2011, not $44.7 billion.

• Some of our recommendations are referred to in the sixty odd blogs that we intend to open during the next few weeks, one blog for each item of revenue and expenditure that are part of the National Budget.

• In each blog we have also opened a section that we have entitled “PARIS III PROGRAM” where we refer to and comment upon some of the measures that the Government promises to take to maximize the revenue and rationalize the expenditure. We also enquire about the progress that has been made to implement this program since February 2007, the month during which it was adopted.

• We shall also publish in the blog site http://www.e4debtservice.blogspot.com a number of charts depicting the results of different scenarios envisaged for the reduction of the public debt;
1. Scenario 1: No measures are taken to reduce or stabilize the debt. This is the worst Scenario. The Debt reaches 363% of GDP in 2015
2. Scenario 2: A number of measures are taken to improve the primary results. The Debt reaches 257% of GDP in 2015
3. Scenario 3: In addition to the measures, the government restructures the public debt and exports it in order to benefit from international Libor rates of interest. The Debt reaches 175% of GDP in 2015
4. .Scenario 4: The Telecom sector is privatized and the proceeds attain 15 billion US Dollars which are used to reduce the Public Debt accordingly. This is in addition to the benefits derived from scenario three and two above. The Debt is down to 95% of GDP in 2015, provided the revenue from Telecom is sustained after privatization.

• We also call on our readers to present their own suggestions to reduce the debt.