Donors in Paris pledge to support Lebanese economy

Lebanon – Closing speech by M. Emmanuel Macron, President of the Republic, at the CEDRE conference (excerpts)

Paris, 6 April 2018

Prime Minister, cher Saad Hariri,

Chief Executive Officer of the World Bank, chère Kristalina,

Ministers,

Ambassadors,

Ladies and gentlemen,

Dear friends,

With the Levant probably going through one of the worst times in its history, with the cruel tragedy the Syrian people are experiencing, the uncertainties still hanging over the Israeli-Palestinian conflict and the tensions surrounding the biggest powers in the region, it’s more crucial than ever to protect a precious asset for everyone, namely a peaceful, diverse and harmonious Lebanon, true to the pluralist commitment that lay behind its creation. And your mobilization signals the strong belief shared by the international community that a Lebanon which is responsible, strong, protected, encouraged and supported is absolutely essential for patiently building the conditions for a restored peace in the Middle East.

In the context I’ve just recalled, many people might be tempted to throw in the towel, to say that, in a way, regional conflicts could outweigh any national stability. The choice your country has made in recent years is to continue on its path. It’s currently a unique path in the region: having stability and institutions, strengthening the state, moving towards freely-organized elections and maintaining a democratic, pluralist framework.

I like to think – as does everyone here today, I believe – that this unique choice can be an example that will help us stabilize the whole region. I’m sure of one thing, namely that if we give in to the pressures in the region, if we decide, in a way, to import to Lebanon all the region’s conflicts and let destabilization surface or increase, then we will, in a way, have cut off a possible path and added misfortune to misfortune.

This is the commitment your country has made, which you’ve pledged to continue and which I made alongside you last September during your own visit to France, Prime Minister; it’s the commitment which I then reaffirmed with your president, General Aoun, when he came to France on a state visit, and which he himself strongly reaffirmed. (…)

The Lebanese people have shown exceptional generosity, but have added new difficulties to their own difficulties. The standard of living of refugees and of the poorest Lebanese people has deteriorated; more than three million people in Lebanon are in need. And so, for all these reasons, it’s our duty to show full solidarity. The continued fighting in Syria unfortunately makes the swift return of Syrian refugees impossible; the sole result of the offensives by Bashar al-Assad’s regime, as in Eastern Ghouta recently, has been more destruction and more people displaced. So the responsibility of all regional players is to help put an end to this vicious circle, and the responsibility of all international players is to help Lebanon in the short term face up to these challenges and work to build the stability which alone is capable of restoring a normal situation in the long term.

In this difficult context, I made several commitments in Paris on 8 December 2017, and the whole international community mobilized to ensure they were honoured. The cycle of international conferences to support the Lebanese state and its institutions began in Rome on 15 March, with the conference to support the army and the Internal Security Forces; it’s continuing today with the CEDRE conference, and on 24 and 25 April the so-called Brussels II meeting, supported by the High Representative, Federica Mogherini – whom I want to thank for her commitment –, and by the United States will provide an opportunity to step up our humanitarian aid to Lebanon and the other countries taking in Syrian refugees.

This is the exceptional mobilization which we need collectively in order to guarantee stability, and which Lebanon needs in order to succeed on this path.

Today you’ve enabled significant progress, and I want to thank you again for this, firstly because this mobilization has allowed us to provide not only public but also private commitments and support Lebanon along this path. As I’ve confirmed to you, France will stand by you by giving Lebanon €400 million in concessional loans, and additionally by doubling the sum of donations that the French Development Agency currently gives Lebanon. France will grant an additional €150 million in donations over the same period, and this commitment by France, totalling €550 million in donations and loans with concessional conditions, will fund priority infrastructure projects which are part of the Lebanese authorities’ investment plan.

All in all, the current conference will allow us to raise a little over $11 billion of public commitments. I hope that several countries will continue signing up to these commitments in the coming hours and days. It will also allow us to mobilize private commitments and the full support of businesses. But all this makes sense only because, above all, there’s the commitment of the Lebanese government and because you’re thoroughly resolved to transform the country and bring about the necessary reforms. (…)

We’ll be at your side in this work, but I know it requires a great deal of courage and determination. And I’d like the international community’s commitment today to send a strong signal to the Lebanese people, both in terms of support and collective determination to continue pushing these reforms through even harder.

France, as you know, has always been there when it’s been necessary to hold strong during the toughest times; it has done so at the most critical moments – I’m thinking of the dark times of civil war during which France committed, among other things, to UNIFIL exactly 40 years ago. But subsequently our support also consisted in helping Lebanon get back on its feet, rebuild itself and cope with its financial difficulties. This is what we did during the previous economic conferences held in Paris and in 2007, President Chirac – to whom I want to pay tribute here for his steadfast commitment to standing by Lebanon – took, among other things, the initiative of a support conference which allowed Lebanon to pick itself up after the terrible conflict of summer 2006.

Eleven years later, Lebanon has endured a great deal, particularly since the start of Syria’s civil war, as I mentioned, and we’ve got to renew our effort, but not see it as a completion point, but a new start. A new start for your country, a new start backed by the whole international community, with an essential follow-up which will have to be put in place tomorrow. (…)

So as you’ll have understood, by helping Lebanon today we want to help the whole region, and by helping the whole region, I’m convinced of one thing: we’re helping ourselves in a big way. And for all these reasons, Prime Minister, ladies and gentlemen, I want to thank you all for your commitment and for making this conference a success. I want to tell you, Prime Minister, how much we’re counting on you and your president to carry through these essential reforms and follow this road Lebanon is taking, and how much you can count on us to help make this path a triumph, because I think it has a deeply universal significance.

Thank you./.

Lebanon – Opening speech by M. Jean-Yves Le Drian, Minister for Europe and Foreign Affairs, at the CEDRE conference

Paris, 6 April 2018

Prime Minister, cher Saad Hariri,

Ministers,

Heads and senior officials of international institutions,

Ambassadors,

Ladies and gentlemen, dear friends,

I am pleased to welcome you to the Ministry for Europe and Foreign Affairs for this day of meetings to rally our support for Lebanon. Prime Minister, all of us here – international organizations, states, NGOs, businesses – have something that connects us with Lebanon. Whether it be because of history, geography or the human ties forged by the diaspora, your country is not foreign to us. I am aware, as France’s Foreign Minister, that I am part of a passionate history shared by our two countries. That is why we are closely affected by everything that affects Lebanon.

In a Middle East shaken by crises and wounded by civil wars, Lebanon remains a model of pluralism, tolerance and openness which we need. But Lebanon is not an island. It is bearing the full brunt of regional tensions and first and foremost of the Syria crisis. It is combating terrorism at its borders and within its own country. With more than a million refugees, it has taken on more than its share of the burden of those fleeing Syria. I would like to commend the exceptional generosity shown by the Lebanese people.

During this tumultuous time, the Lebanese people have acted in an outstanding spirit of responsibility over the past few months. The election of Michel Aoun as President, after two years of this office being vacant, then the formation of a national unity government under your authority, Prime Minister, and lastly, the adoption of a new election law have all been steps towards stability. This winter, after a period of uncertainty, your government was able to find a united and reform-focused political platform and reaffirm the principle of disassociation from regional crises. In exactly one month’s time, the Lebanese people will elect a new Parliament for the first time in many years. The return to normal functioning of institutions will thus be achieved. We must make the most of this alignment of stars. This is what the friends of Lebanon have started to do at your side.

Last December, the meeting in Paris of the International Support Group provided the international community with the opportunity to reaffirm its commitment to the stability, security and sovereignty of Lebanon. It reminded all of the Lebanese players of their commitment to disassociate themselves from crises and not to get involved in regional conflicts. It reaffirmed the principle according to which only the Lebanese state may possess weapons, in compliance with Security Council Resolution 1701, which is still relevant today and which guides the action of UNIFIL in particular. It also called upon all those who exert influence in Lebanon to respect the sovereignty of the state and do nothing to weaken national institutions.

Ladies and gentlemen,

In international relations, as the saying goes, there are no friendships, just displays of friendship. That is why in the context I’ve just mentioned, we collectively took action in support of Lebanon and its institutions in the key areas of security, humanitarian affairs and the economy.

First in Rome, on 15 March 2018, to strengthen the Lebanese Armed Forces and the Internal Security Forces, because government institutions, and particularly those responsible for security, are the cornerstone of the country’s unity and independence. I would also like to thank Italy and the United Nations again for organizing and chairing this conference. In Rome, France shouldered its responsibilities and opened a credit line of €400 million to the benefit of Lebanon to modernize its forces, in addition to shoring up its bilateral cooperation. This is an important step and we accomplished it together.

At the conferences in London in 2016 and in Brussels in 2017, the international community provided its aid to respond to the humanitarian emergency that the massive presence of Syrian refugees in Lebanon generated. It will renew its commitment at the end of this month at the Brussels II conference held thanks to the European Union. But to be effective, our aid cannot be limited to the humanitarian sector. It is clearly the entire economic fabric, and in particular infrastructures and public services, which are actually suffering and consequently require support. That is what has brought us together here today.

The name of the conference we are attending, the CEDRE conference, is symbolic. It is also a programme of action: the economic development of Lebanon through reforms and with businesses. The work conducted ahead of this conference by the International Monetary Fund and the World Bank enabled us to have a clear idea of Lebanon’s economic situation and its outlook. The starting point for our work, which was fuelled by our discussions with civil society and the private sector, was a very simple two-pronged observation that was agreed by a general consensus. First, Lebanon needs significant investments to update its basic infrastructures, which are no longer able to provide all its citizens with basic public services in the proper conditions. Second, Lebanon’s economy urgently needs far-reaching structural and sectoral reforms. Lebanon’s stability from an economic point of view is therefore based on the combined action of Lebanese reform and international support.

With this in mind, today we are going to make tangible and substantial commitments. They are, I repeat, reciprocal commitments, since international support must accompany the reforms that the Prime Minister will present to you. I would like to emphasize the Lebanese authorities’ commitment in this process. Your presence, cher Saad Hariri, and that of the five ministers at your side, representing the diversity of your government, fully reflect this.

I believe that in the two areas I’ve just mentioned – investments and reforms – the Lebanese authorities have made efforts to map out clear and long-term outlooks. They have done so with an investment plan, the Capital Investment Programme (CIP), and a reform programme, that we will review together today. This is the outcome of credible, serious and ambitious work, which was conducted in close collaboration with partner countries and international institutions. There will also be regular joint monitoring of the announcement and the commitments made today.

I would like to add that the momentum launched by CEDRE has already produced results. Lebanon adopted its 2018 budget last week. Last year’s budget was not passed until last autumn and was the first budget to be passed in 12 years. Also, the Lebanese Parliament has just concluded its reform of the Water Code which is essential to a number of projects being considered in the Lebanese authorities’ investment plan.

Prime Minister, you are going to present projects that were identified and reforms that should be conducted.

We would like to say what our commitments will be, keeping in mind that alongside states and multilateral donors, the private sector, which is also represented here among us and which will also have the floor, should play a full role in this transformation. France will announce a substantial effort commensurate with our ambitions in Lebanon of €400 million in concessional loans and €150 million in donations.

That is what I wanted to say to you to introduce our work. I now give the floor to the Prime Minister. Thank you./.

Lebanon – Economic Conference for Development through Reforms with the Private Sector (CEDRE) – Joint statement

Paris, 6 April 2018

1. CEDRE (Conférence économique pour le développement, par les réformes et avec les entreprises), an international conference in support of Lebanon development and reforms, was hosted by France on 6 April 2018. M. Emmanuel Macron, President of the French Republic, and Mr Saad Hariri, Prime Minister of the Republic of Lebanon, addressed the conference. The conference was chaired by M. Jean-Yves Le Drian, France’s Minister for Europe and Foreign Affairs and by M. Bruno Le Maire, France’s Minister for the Economy and Finance. 48 countries and institutions took part in the meeting, with some representatives from the private sector and from civil society.

2. In line with the statements of the meeting of the International Support Group held in Paris on 8 December 2017 and the ministerial meeting in support of Lebanon’s armed forces and internal security forces, held in Rome on 15 March 2018, the participants expressed their commitment to the unity, stability, security sovereignty and territorial integrity of Lebanon, urging Lebanon’s leaders to implement and further expand a tangible policy of disassociation. They also expressed their support for the ongoing efforts of the Lebanese authorities to improve the functioning of State institutions and prepare the holding of legislative elections in accordance with international standards. They shared the view that, for a number of years, Lebanon has faced important challenges impeding its economic and human development. Lebanon needs the full support and solidarity of the international community, at a crucial juncture.

3. Participants welcomed the return to normal functioning of state institutions: the election of the President, the appointment of a national unity government, the adoption of a new electoral law, which will be followed by parliamentary elections, scheduled to take place on 6 May. They also welcomed the senior appointments to fill vacancies in the public administration. They noted the first oil and gas tenders. They further commended the adoption of the budget in 2017 for the first time in 12 years and welcomed the recent adoption of the 2018 budget, as well as the adoption of the water code.

4. Despite favorable recent developments, Lebanon continues to face vulnerabilities and mounting challenges. The conflict in Syria and the resulting displacement of population and mass influx of refugees and displaced into Lebanon have affected the Lebanese economy, its infrastructure and social services. Unemployment, which was already high particularly among the youth, has sharply increased. More than 200,000 Lebanese have been pushed into poverty. These are important challenges for Lebanon, which, by hosting displaced populations, provides a global public good on behalf of the international community. To this end participants look forward to the holding in Brussels of the “Supporting the future of Syria and the region” conference, on 24-25 April at the invitation of the European Union and the United Nations.

5. Fundamentally the economic recovery and long term development of Lebanon are hindered by structural problems: high fiscal deficit (around 10% of GDP) and high level of public debt (around 150% of GDP), resulting in a major drop in capital expenditures to less than 1% of GDP per year. The GDP growth rate remains low.

6. Prime Minister Hariri presented the Lebanese government’s “Vision for stabilization, growth and employment”, which was welcomed by all participants. This vision is based on four pillars: (1) increasing the level of public and private investment; (2) ensuring economic and financial stability through fiscal adjustment; (3) undertaking essential sectoral reforms and cross-sectoral reforms, including fighting corruption, modernization of the public sector and public finance management; (4) developing a strategy for the reinforcement and diversification of Lebanon’s productive sectors and the realization of its export potential.

7. The government of Lebanon presented its ambitious Capital Investment Programme (CIP), which is mainly focused on infrastructure development and rehabilitation. The total cost of the first phase of the CIP (covering six years for preparatory works and implementation) is estimated at US $10.8 billion (including expropriation costs), of which around 35 % could come from private investment. Taking into account the scope and ambition of this programme, and the overall positive assessment by the World Bank Group, participants decided to contribute to the first phase of the programme, while, in parallel, supporting the Government’s implementation of reforms and institutional strengthening, which are critical to the programme’s successful delivery and Lebanon’s macroeconomic stability. They emphasized some sectoral priorities of Lebanon’s government: energy, water, and waste management, which are essential for the population’s needs. They also noted the importance of private sector investment in the transport sector. Public transport remains a major investment target for the government. Participants commended the adoption of the Public Private Partnership law, which lays the basis for private participation in public sector projects. Moreover participants emphasized the need to increase investment and expenditure in social sectors, including health and education. Participants also encouraged the government and the World Bank Group to keep working on the CIP, including on the prioritization and the phasing of projects, and to ensure that necessary sectoral reforms are implemented on time. Appreciation was expressed for the important work done by the international organizations in Lebanon.

8. Recognizing that sound fiscal management is central to improving the confidence of international investors, both private and public, the Lebanese Government, supported by the donor community, commits to a challenging fiscal consolidation target of five percentage points of GDP over the next five years, through a combination of revenue measures (including improved collection of taxes) and expenditure measures, such as a reduction of transfers to Electricité du Liban (EdL), allowing a primary surplus. These are crucial steps to support macroeconomic stability, to gradually reduce public debt, and to generate the best outcomes of the CIP, including a sustainable stimulation of growth.

9. Participants commended the measures adopted before the Conference to build confidence with the international community, donors and the private sector. This includes speeding up the implementation of projects already committed, signing and ratifying loans, and allocation as well as disbursement of local counterpart funds. This should also include the allocation of human and financial resources to the High Council for Privatization and Partnership.

10. The Lebanese Government recognizes that the implementation of structural and sectoral reforms is critical to attract new investment and implement modern and strategic infrastructure. The Government committed to reforms, which are needed to address structural difficulties and loopholes, and foster public and private investment in a sustainable way. Regarding structural reforms, the Lebanese government stressed that fighting corruption, strengthening governance and accountability, including public finance management, modernizing procurement rules, reforming customs and improving public investment management are of utmost importance. In addition, Lebanese authorities will continue to strengthen their anti-money laundering efforts and to take steps to counter the financing of terrorism in line with international standards. Regarding sectoral reforms, three fields are considered to be essential, to make the CIP a success: as regards electricity, an ambitious tariff reform alongside increased power generation; in the water management field, the implementation of the water code is crucial; in the field of waste management a new strategy, based on decentralization is under way. They finally agreed that an inclusive approach that takes into account effects on women would further bolster international support.

11. In this enabling context, participants considered that, given Lebanon’s high debt levels, concessional financing and private investment are the best instruments to invest in infrastructure and create jobs, along with the implementation of a consistent budgetary and fiscal adjustment programme. They pledged their support to Lebanon’s investment and reforms programme for Phase I:

-  US $10.2 billion loans have been pledged, including 9.9 billion in concessional terms
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-  US $0.86 billion grants (including grants to subsidize loans)
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They encouraged the private sector to participate to the financing of the CIP, on a project basis.

12. Participants attach the utmost importance to a robust follow-up mechanism for this conference, to ensure that commitments, reforms and pledges will be implemented.

The Lebanese government, with the support of donors and investors, intends to streamline their procedures for clearance, approval and implementation of externally funded projects. Streamlining the procedures will make the implementation of the CIP more successful and will help build trust with key stakeholders. In this regard, participants welcomed the Lebanese government’s commitment to strengthen implementation capacity, with international support, ensuring it meets international standards on transparency, accountability, anti-money laundering and combating the financing of terrorism.

A coordination mechanism between donors and authorities, informed by a continuous dialogue with the private sector and the civil society, will be set up in Beirut. Regular follow-up meetings of senior officials from capitals and headquarters will be organized. A dedicated website will be designed to ensure transparency on project financing and implementation.

13. Partner countries and institutions look forward to working with the new Government of Lebanon, after the next parliamentary elections, on the implementation of the CIP and of the reform agenda, including developing a concrete timetable for reforms. They will meet at the level of senior officials from capitals and headquarters soon after a new government is formed./.

Published on 14/04/2018

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