Lebanon government to agree to economic reforms, says Finance Minister

Over $11 billion in infrastructure investment is at stake

Lebanese President Michel Aoun headed the first meeting of the cabinet at the presidential palace in Baabda. Reuters

Lebanon's new government will agree to implement all the economic reforms the country promised at an international donor meeting last year, its finance minister said on Tuesday.

Rival parties formed a new unity government on Thursday after nearly nine months of wrangling. Like the previous coalition, it is headed by Prime Minister Saad al-Hariri and includes most major factions.

Since the government was formed, a Cabinet committee has been working on a draft statement of government policy that will be put to parliament.

The ministerial statement will include all the reforms in a Paris conference of donors and the commitment to reduce the deficit and carry out fundamental reforms in various sectors, Finance Minister Ali Hassan Khalil told Reuters.

At last year's conference, donors pledged more than $11 billion (Dh40 bn) in infrastructure investment to help boost its weak economy, on condition the country carries out economic reforms. Mr Hariri pledged at the conference to reduce the deficit as a proportion of GDP by 5 per cent over five years.

Lebanon's public debt is one of the world's highest,  equivalent to about 150 per cent of gross domestic product.

The policy statement will be put to Cabinet for approval on Wednesday, before it goes to parliament, and will maintain the position of keeping out of regional conflicts like Syria, Information Minister Jamal al-Jarrah said.

Lebanon declared a principle of "disassociation" in 2012 to keep the deeply divided state formally out of regional disputes such as the lengthy war in neighbouring Syria.

Washington had urged it to uphold that after the Iran-backed Hezbollah group gained more influence with another seat in Cabinet. Despite the disassociation policy, the heavily armed Hezbollah has been fighting for years in Syria alongside President Bashar al-Assad.

"We as a state are committed to distancing ourselves from events in the region," Jarrah said.

Hezbollah's bigger role — with three seats out of 30 in Cabinet — reflects the greater clout it has obtained from involvement in Syria and gains by allies in May's parliamentary election.

The US government has urged Lebanon's new government to ensure resources do not help Hezbollah, which it deems a terrorist organisation.