By Yara Bayoumy
BEIRUT, Feb 5 (Reuters) - Billions of dollars of international aid pledged to alleviate some of Lebanon's massive public debt risks being delayed or even cancelled if the stalemate in the country's political crisis drags on, a Lebanese minister said on Monday.
Economy and Trade Minister Sami Haddad said Lebanon could risk losing some of the $7.6 billion in grants and loan pledges it obtained at a Paris aid conference last month due to the crisis between the Western-backed government and the opposition, led by the Syrian- and Iranian-backed Hezbollah.
When asked how the political crisis would affect the delivery of aid, Haddad told Reuters in an interview:
"I expect that we would receive some of the aid, some of the grants but we will either see a significant delay in receiving the funding and/or some of the funding we will not see," he said at an office in the governmental palace, metres away from the opposition-sponsored tent city which has paralysed Beirut's commercial city centre since Dec. 1.
"If the political stalemate continues, the consequences to the economy will be very negative and will certainly jeopardise the amount of aid we would receive and would jeopardise the timing over which it will be received."
Lebanon is weighed down by a $41 billion public deficit and is reeling from last year's war between Israel and Hezbollah guerrillas.
Should the present crisis be resolved, Haddad said he was confident the grants would be received during 2007. The grants are estimated at between $800 million and $1 billion and would go directly to reduce the country's debt.
Haddad also said around $1-$1.5 billion was earmarked for the private sector, all in the form of loans disbursed through the banking sector, and most of which will go to small- and medium-scale enterprises. "I have a rough estimate that this money will be disbursed over the next two years."
The bulk of the other loans will be received within the next two to three years, he said.
Haddad emphasised that the privatisation of the telecom sector was key to significantly reducing Lebanon's debt since sale proceeds could be as much as $5 billion.
"Without it we will not be saved ... the transaction that will make a very signifcant dent in our indebtedness and can happen overnight is the privatisation of the telecom sector."
"It is crucial to saving Lebanon's economy, I'm hoping it will happen by this summer."
Lebanon's government has unveiled an economic reform programme which includes the sale of a majority stake in or full sale of mobile sector companies as well as tax reforms including raising VAT rates.
