Beirut counts cost of recovery

08 September 2006
Beirut secured $940 million worth of aid for its early recovery plan (ERP) at a donor conference in Stockholm on 31 August. 'The aid will go towards immediate recovery needs,' Kathleen Cravero, head of crisis prevention and recovery at the UN Development Programme (UNDP), told MEED from Stockholm in late August.
'It will be split into nine areas,' says Cravero. They include: the clearance of unexploded mines; displaced people requiring

housing units; basic social services; the environment; Palestinian refugee camps;

industrial and agricultural production; public finance; unemployment and livelihoods; and infrastructure.

Plans are in the pipeline to hold a reconstruction conference in Beirut by the end of the year.

Estimating the costs of reconstruction has been complicated. 'Its very difficult to put a figure on this,' says Roger Melki, senior adviser to the finance minister. 'The direct and indirect costs are hard to estimate. A conservative estimate on the cost to the industrial sector is put at $200 million-220 million, but if you take a milk production unit the cost of the machines is put at $10 million while replacing them could cost more than $20 million.'

Some of the early figures put on the cost of reconstruction should be treated with care. 'The UNDP figure of $15,000 million is very high,' says Melki. 'The government is more cautious in its figures. I think we will revise the estimation. From 1991-2006, we didnt spend more than $5,000 million.'

The reconstruction is likely to be eased after Israel lifted its air and sea blockade on the country on 8 September.

Before the conflict started, Beiruts economy was already struggling under debt. Standing at $38,800 million at the end of May, the public debt is expected to rise. Growth for 2006 is expected to decline from a predicted 4-5 per cent of gross domestic product (GDP) to 0 per cent.

However, fears that the economy is now likely to slide into recession may be premature. 'Recession is not the right word,' says a London-based analyst. 'This [conflict] was a one-off shock. What impact this all has on investor confidence is key.'

(see Cover Story and Briefing, pages 6-9)

www.meed.com/economy

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