Lebanon’s plan to raise public pay dismays finance minister

Lebanon’s cabinet referred a draft law on a new public wage scale to parliament early on Friday, bowing to popular pressure but endangering efforts to control a runaway budget deficit.

Finance Minister Mohammed Safadi said the draft law, which would raise the minimum wage 35 percent and cost around $1.2 billion (790.2 million pounds) a year, would be “economically devastating” for Lebanon. (more…)

Moody’s downgrades Lebanon banking-system outlook

Moody’s Investors Service lowered its outlook on Lebanon’s banking system to negative from stable, citing slowed economic growth and regional political uncertainty.

The rating firm said Syria’s current instability was especially notable, as was the local banks’ exposure to countries with political unrest or economic slowdowns or both, such as Egypt or Jordan. (more…)

Israeli greed, debt behind Lebanon energy law

Lebanon’s parliament has approved a new energy law which paves the way for exploration of offshore oil and natural gas. (more…)

Lebanon needs to reduce debt by $23 billion

Lebanon should cut its public debt to about 80 percent of gross domestic product, from the current level of 147 percent, Templeton Asset Management Ltd.’s Mark Mobius said. Mobius, who oversees about $34 billion in merging market assets as Templeton’s Singapore-based executive chairman, said he’s considering an investment in Lebanon’s banking and real estate industry this year. (more…)

Sovereign debt and Pigouvian Taxes

By Ghassan Karam
Sovereign debt, as a potentially crippling fiscal problem world wide, has risen to the forefront over the past few months.

FLagarde: France extends Lebanon debt repayment

French Finance Minister Christine Lagarde announced on Friday a one-year extension on a 225 million euro (323 million dollar) loan to Lebanon agreed in January 2007, pending economic reforms.
“France will extend for one year the loan agreed to as part of the Paris III accords for the reconstruction of Lebanon,” Lagarde told reporters during her visit to Beirut where she was accompanied by 23 French business leaders.
The extension until December 2010 “will allow Lebanon to meet, with an additional delay of one year, the conditions for the release of the second tranche…(namely) the liberalization of the mobile phone sector and the privatization of the electricity sector,” she added.