Finance Minister Fouad Siniora said in the UAE on 28 October that GCC states had agreed to provide up to $5,000 million in loan guarantees to support the government’s efforts to restructure its estimated $29,000 million public debt. Siniora was accompanying Hariri on a tour of the Gulf. The premier went on to Paris for talks on 29 October with President Chirac about the timing of the Paris 2 summit. A date of 23 November has been provisionally agreed.

The government has been looking to ease the burden of servicing the debt through raising fresh loans at lower interest rates and with longer maturities. The loans are to be secured against future privatisation revenues. The guarantees pledged by the GCC states will help to ensure that Lebanon gets optimal terms on the new facilities, analysts say.

The government has said it hopes to raise some $5,000 million from a number of key privatisation deals to be concluded over the next year. They include the planned sale of two GSM licences and the sale of an initial 40 per cent stake in the generation and distribution business of Electricite du Liban (see Power & Water).

Siniora has also emphasised that the government will be in a position to present a much- improved fiscal picture at the Paris 2 conference, which will provide additional reassurance to creditors.

The government is on target to achieve its first post-war primary budget surplus in 2002, thanks largely to the successful introduction of value-added tax (VAT) at the start of the year. In the draft budget for 2003, the government has set a target of achieving a primary surplus of £Leb 2 million million ($1,320 million) and an overall deficit of 23.8 per cent of total spending, compared with over 40 per cent for 2002 (MEED 30:8:02).