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$11 Billion Pledged at CEDRE Conference
April 4, 2018 - Al Jadeed Studio, Beirut, Lebanon
On April 6, 2018, the Lebanese government went to the CEDRE conference in France to request funds for an eight to twelve-year investment program in infrastructure. The government collected pledges of $10.2 billion in debt and 0.86 billion in grants, in a bid to support the first phase of the program. The funds will be invested in transportation, mainly roads, but also in electricity, water and irrigation, wastewater, telecommunication, and solid waste management.
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LIMS Opposes CEDRE
Lebanon does not have proper institutions that would prevent the squandering of CEDRE’s money. The country ranks very low in efficiency of government spending and transparency of government policymaking, all while ranking high in favoritism in decisions of government officials, along with irregular payments and bribes. The government is clearly unreliable to upgrade the quality of infrastructure. Therefore, CEDRE will simply add up to the current $79.5 billion of public debt which represents 150% of the GDP.
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Why Spend $3.6 Billion of CEDRE Funds on Electricity, When Zero Dollar Solution Exists?
During his interview with the Al Hadath program on Al Jadeed TV, Dr. Patrick Mardini, the president of LIMS, revealed that $3.6 billion dollars of CEDRE’s money is destined to investments in electricity. He suggested an alternative solution that would resolve the problem, while costing virtually zero dollars to the government. He argued for opening the electricity market to competition, to attract private investors to the sector. Instead of forcing households into buying electricity from the failed government company, households should be allowed to choose their supplier freely.
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Why Spend $5.9 Billion on Transportation?
Instead of spending CEDRE’s borrowed money on government investments in transportation (mainly roads), private toll roads can save the money. Toll roads can be built, owned, and operated by private companies at no cost to the public. Financing can come through private debt and equity, which would be repaid through toll revenues. Adoption of this plan would help Lebanon resolve its traffic problem, as it has done so for many countries, at nearly no cost to taxpayers.
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Higher Cost of Borrowing for Everyone!
Dr. Mardini stressed on the cost of additional government debt, that would be transferred to households not only through future taxes, but also through higher interest rates. He explained that interest rates on car, housing, personal and business loans, are calculated by adding a premium to the government rate. Higher public debt would mean higher rates on Lebanese sovereign bonds, leading to more expensive loans for households and businesses. Rates are already very high in Lebanon since the country is currently the third most indebted in the world. The government should focus on internal reforms to decrease spending and downsize.
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Smart Meters, Not CEDRE’s Program, Ideal for Lebanon’s Electricity Progress
April 5, 2018 - MTV Studio, Beirut, Lebanon
During the expert opinion segment at MTV's prime time news, Dr. Mardini, highlighted that around 40% of electricity production is wasted in Lebanon because of the inefficient network and more importantly, because of stolen electricity. The remaining 60% is sold at a loss. Any additional investment in production capacities, using CEDRE’s debt, will not resolve the problem and the extra production will still be stolen and sold at a loss. He gave the example of Georgia, a country who managed to reduce the unbilled amount of electricity from 70% to 5% using regional, smart electricity meters.
Click Here to Watch the Full Interview in Arabic
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LIMS Director Voices Concern Over CEDRE’s Proposed Solutions at Roundtable Event
April 20, 2018 - Riviera Hotel, Beirut, Lebanon
LIMS director, Kristelle Mardini, was invited to the Democratic Renewal Movement roundtable along with Lebanon’s top economists and public policy experts to discuss what’s needed to trigger growth. Ms. Mardini questioned CEDRE's proposed solutions and described them as worn out, aged, and were proven to be ineffective when they were tried in previous donor meetings, such as Paris 1 and 2 and 3. She insisted on how crucial it is for the government to adopt new solutions for infrastructure problems, instead of re-writing abused ones. Additionally, she reminded the participants of how Lebanon was prosperous in the 50s and the 60s when laissez-faire and small government were combined, and compared it to the post-civil war era where additional government spending and debt has only led to more taxes and growth.
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Upcoming Events
LIMS Leaders' Academy - LLA 301
Shaping Public Policy - Workshop
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