Lebanese PM, Saudi minister talk support for country’s economy

Saudi Finance Minister Mohammed Al-Jadaan
Updated 24 September 2019

Lebanese PM, Saudi minister talk support for country’s economy

  • Beirut remains one of the world’s most heavily indebted governments, a victim of low growth and lack of capital inflow

BEIRUT: Prime Minister Saad Al-Hariri spoke to the Saudi finance minister on Saturday about support for the Lebanese economy and preparations for the first meeting of a bilateral council, his media office said.

Saudi Finance Minister Mohammed Al-Jadaan said on Wednesday that Riyadh was in discussions with the Lebanese government about providing financial support, lifting Lebanon’s dollar-denominated government bonds.

Lebanon, one of the world’s most heavily indebted states, faces financial strains linked to a slowdown in capital inflows needed to meet the financing needs of the government and the import-dependent economy. Years of low growth also weigh heavily.

Central bank foreign assets have been in decline. These, excluding gold, fell around 15 percent from an all-time high in May last year to $38.7 billion in mid-September.

In a phone call, Hariri and Al-Jadaan discussed “preparations to hold the first meeting of the Lebanese-Saudi joint committee and ... the agenda that includes agreements and memorandums of understanding that are intended to be signed.”

They also discussed “ways leading to the support of the Lebanese economy and the participation of the Saudi private sector in projects included in the Cedre conference,” a reference to a major infrastructure investment program.

Lebanon won pledges of some $11 billion in financing for the investment program at the “Cedre” conference in Paris last year. But foreign governments including France first want to see Beirut follow through on long-delayed reforms aimed at putting the public finances on a sustainable path.

A Lebanese official source told Reuters on Wednesday that work was underway to convene the bilateral council in October.

The statement from Hariri’s office gave no details of what kind of financial support Saudi Arabia might provide.

Krisjanis Krustins, director at Fitch Ratings, noted that one step taken by Saudi Arabia and others to help Lebanon in the past was to deposit funds at the central bank.

“Buying bonds is another option and another thing that could be done is support for purchase of petroleum products. Investments are another option but (it’s) not clear what assets they would buy other than bonds,” Krustins said.

Finance Minister Ali Hassan Khalil said on Wednesday Lebanon would “very soon” start measures to issue foreign currency bonds of about $2 billion.


India opens vast railway network to private players

Updated 02 July 2020

India opens vast railway network to private players

  • The 167-year-old train network carries 20 million passengers daily
  • India’s railway ministry said it would now permit businesses to run trains along 109 routes
MUMBAI: India has opened up its vast railway sector to private companies, allowing firms to operate trains on certain routes, in a bid to boost its stuttering, virus-hit economy.
The 167-year-old train network carries 20 million passengers daily but is plagued by deadly accidents, rickety infrastructure, lack of modern amenities and poor investment.
In an announcement late Wednesday, the railway ministry said it would now permit businesses to run trains along 109 routes, inviting bids from firms weeks after New Delhi opened up coal mining to the private sector.
“This is the first initiative of private investment for running passenger trains over Indian Railways network,” the ministry said in a statement.
“The objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world class travel experience to passengers,” it added.
The project will require an investment of $39.8 million and private players will have to pay the government fixed haul charges and a percentage of profits determined during the bidding process.
Prime Minister Narendra Modi has sought to privatize a range of industries that have been under state control for decades, sparking criticism from the opposition Congress party.
“Now the government is in a desperate mood to sell a great chunk of one of our largest national asset #IndianRailways,” Congress politician Adhir Ranjan Chowdhury tweeted.
“Privatization cannot be construed as a panacea of railways malady,” he added.
The tottering network is notorious for accidents, with 15,000 passengers killed every year according to a 2012 government report that described the deaths as a “massacre.”
Asia’s third-largest economy has been clobbered by the pandemic and a months-long lockdown, growing at its slowest pace in at least two decades last quarter.
The shutdown, which put millions out of work overnight, is widely expected to plunge the country into recession.
Fears for the economy prompted the government to allow many businesses to resume operations starting last month despite an ongoing increase in infections, which have now crossed 600,000.
Even before Modi announced the lockdown in late March, the economy was struggling to gain traction with sluggish growth, record unemployment and a flurry of bad loans making banks reluctant to lend.