27 August 2008

BEIRUT: The Finance Ministry said Tuesday Lebanon's gross public debt in the six months of 2008 reached LL67.060 trillion ($44.5 billion).

"By the end of June 2008, gross public debt reached LL67.60 trillion, a 5.83 percent increase over the end-December 2007 level, with net public debt at LL60.909 trillion, registering an increase of LL2.072 trillion over the end-December 2007 level," the ministry said. By currency composition, 52 percent of gross public debt is in domestic currency, with the remaining in foreign currency as follows: 40.8 percent in US dollars, 5 percent in euros, and 2.1 percent in other foreign currencies by end-June 2008, it added.

Starting June 12, high demand on Treasury bills and notes has been noted with primary market rates on a gradually decreasing trend and high demand from commercial banks who subscribed to 81 percent of Treasury bills and notes in the second quarter of 2008.

On the foreign currency debt front in QII 2008, Lebanon issued a $881.612 million 9 percent coupon Eurobond due 2014 at a yield of 9 percent in May 2008. The issue was a result of the successful completion of a voluntary debt-exchange offer and the issuance of new notes worth $150 million. Foreign currency loans at LL4,962 billion, 41 percent of which are in euros and 30 percent of which are in dollars, are mainly allocated to budgetary support (47 percent), and project financing (53 percent) with the main recipient sectors being the water sector (17 percent), transportation sector (10 percent), and power sector (9 percent).

But economists say that if the Finance Ministry adds outstanding debt owed to the National Social Security Fund, municipalities, hospital owners, contractors and land expropriation, the public debt figure would be considerably higher.

The previous Cabinet vowed to reduce the public debt during the Paris III donors conference through the privatization of the telecom sector and reducing expenses in the public sector.

But most observers doubt the current Cabinet will be able to implement reforms because the ministers will be too busy preparing for the 2009 parliamentary polls. - The Daily Star

© Copyright The Daily Star 2008.

 

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