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Wednesday, 16 October, 2002, 16:13 GMT 17:13 UK
Lebanon asks to borrow $5bn
Lebanese fishermen
Workers are already facing wage cuts and increased taxes
Lebanon, already crippled by a $29bn (19bn) debt mountain, is seeking more loans to help service its existing debt.

The cash-strapped country will ask donors for a further $5bn in long-term, low-interest loans at a meeting in Paris.

Finance Minister Fouad Siniora said the extra $5bn could be used to pay-off existing, high-interest loans.

The massive public debt has been eating up most of the government's cash and choking economic growth.

Lebanon's public debt - amassed during the rebuilding phase after the 1975-90 civil war - has now ballooned to the equivalent of about 170% of the country's economic output.

Belt tightening

Lebanon has been working hard to swap local currency debt for cheaper, hard currency bonds.

It has also adopted a stringent new budget, cutting spending by 10% and increasing revenue by 16%.

Value-added-tax (VAT) was introduced for the first time last February in order to boost the coffers.

And Lebanon is also pressing ahead with controversial sales of its state electricity and mobile phone firms to raise cash.

Parisian hopes

Lebanon is pinning its hopes on a forthcoming conference of wealthy nations in Paris to try and raise the extra funds.

The Paris conference was originally scheduled for late 2001 but was delayed due to poor market sentiment.

A finance ministry statement said Lebanon would try to borrow $2bn from European countries, $2bn from Arab countries and a further $1bn from Canada, Japan and Malaysia.

A previous donor conference in Paris drew about 500m euros in aid.

See also:

20 May 02 | Country profiles
26 Aug 02 | Business
29 Jul 02 | Business
17 Jun 02 | Business
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