Saniora Says Political Rift Overshadowed Country's Struggling-Economy

Head of al-Mustaqbal parliamentary bloc MP Fouad Saniora stressed on Monday that the political rift in Lebanon is the main cause of the poor economic growth and deflation.

“The decline in economic growth and deflation is considered a normal matter amid the current political and security situation,” Saniora said in comments published in al-Liwaa newspaper.

He expressed hope that Lebanon would overcome its tough economic situation, saying “Lebanon is passing through a delicate and hard stage due to the surrounding political developments.”

In December, Fitch, the rating agency, downgraded Lebanon's long-term foreign and local currency issuer default rating (IDRs) to negative, citing political uncertainties, spill-overs from the Syrian conflict on economic performance and slow growth prospects.

S&P also lowered to 'B-' from 'B' its long-term counterparty credit ratings on three Lebanese banks, Bank Audi SAL–Audi Saradar Group, BankMed s.a.l., and Blom Bank sal.

“As long as Hizbullah insists on engaging in battles in Syria... It is unlikely to achieve acceptable growth rate,” Saniora pointed out.

He told the newspaper that “the role of the state institutions should be reactivated by allowing law to prevail in all livelihood matters... in order to reactivate the economy,” Saniora pointed out.

The World Bank estimates Lebanon will need $2.6 billion over three years just to handle the refugee situation.

Last week, An international support group for Lebanon appealed for nations to extend pledges of financial help for the country, which is coping with an influx of Syrian refugees, terror attacks and a struggling economy.

The Lebanese economy also needs injections of funds, and received contributions from France, Norway and Finland — placed in a World Bank trust fund.

France contributed some 7 million euros ($10 million), Norway $4.8 million and Finland $3 million, according to an official at the French presidential Elysee Palace. The official was not authorized to speak publicly and could not be named.

France, Lebanon's one-time colonial ruler, has committed 10.4 million euros toward helping the refugees and will unblock another 1 million this year. The French Development Agency is supplying 3 million euros for NGOs.

Lebanese President Michel Suleiman said his country will require years of support, saying the burden it carries threatens its stability.