Lebanon needs to spend at least $20 billion to improve its basic infrastructure


(Reuters) – Lebanon needs to spend at least $20 billion to improve its basic infrastructure otherwise the high growth the country has been witnessing will “dwindle and vanish,” the economy and trade minister said on Wednesday.

Lebanon is famous for its robust service-oriented sectors, but many investors are discouraged from setting up businesses in a country where power cuts are frequent, road networks beyond the capital are insufficient and communication lines are slow.

The 8 percent average growth Lebanon has seen for the last three years was mostly driven by consumer confidence after Qatar mediated a peace accord between the country’s rival political parties in May 2008, which created a national unity government.

Guns fell silent, tourism soared and Lebanese expatriates returned, but the government has been unable to make any major investments to support the service-driven economy because of difficulty in getting major policy decisions passed.

“Today, our main problem against future growth is basically the infrastructure and if we do not sort out the infrastructure, this growth that we’re witnessing today is going to dwindle and will vanish,” Mohammed Safadi told the Reuters Middle East Investment Summit.

“The growth that we have witnessed is more goodwill for the future rather than a real, integral growth in the economy itself,” he said.

Safadi said improvements were needed in the areas of electricity, water, communications and roads.

“You’re not talking about less than $20 billion … to get these areas to basic (levels). We’re not talking about expansion needed for the future, just to cope with demand today.”

A total of $4 billion is earmarked for infrastructure investment in the 2010 and 2011 budgets, neither of which have been ratified by parliament because of political wrangling.

If the budgets are ratified, Lebanon expects to spend $1.2 billion to $1.3 billion on expansions and improvements to electricity and water networks, $300 million to $400 million on roads and the rest on communications, Safadi said.

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