The government’s latest proposal to ease the economic crisis creating a special debt management and reduction account at the Central Bank funded by privatization operations is scheduled for discussion during a Cabinet meeting Thursday.
The draft law, which was prepared by the Finance Ministry and distributed to ministers over the weekend, stipulates that the surplus in the primary account of the state budget be deposited into the new account at the Central Bank.
The primary account is made up of all government expenditures minus debt service and stood at LL625 billion in the 2002 budget, according to the preamble of the draft law.
The proposed account, according to the draft law published by Al-Mustaqbal daily on Sunday, will also receive funds received from privatization operations and financial assistance that is earmarked for servicing or restructuring the debt, which stands at around $28 billion.
It cites the government’s “serious” intent to move ahead with privatization as a justification for creating the account.
The draft stipulates that the government also deposit in the account net profits from Casino Liban, the Tobacco and Tambac Regie and the mobile phone sector for a period of 10 years.
The draft law lists several potential privatization operations from which revenues will also be deposited into the new account.
It says that other privatizations, should they take place, will be included in the process.
The draft stipulates that the funds in the account not exceed the amount of the primary account surplus of that year’s budget. It also permits the process of securitization, which involves estimating the net present value or future value of assets and the sale of rights to collection of revenue from operations such as privatization.
Former Finance Minster George Corm, a critic of premier Rafik Hariri’s economic policies, said that there were “positives and negatives” in the proposal.
Speaking to LBCI on Sunday, Corm predicted that a new account at the Central Bank would not help in the drive toward better debt management, suggesting instead the creation of a special fund for this purpose.
“We will have to see the international reaction to such a move,” Corm said.
The former minister also complained that the Central Bank appeared to be “expanding its influence” at the expense of the Finance Ministry.
Government officials were unavailable to comment.