08/14/2012, 00.00
LEBANON

Maronite Church warns that Lebanon might collapse economically by 2016 like Greece and Italy

by Fady Noun
Bishops warn the country that a runaway national debt could lead to bankruptcy like in Greece, Italy and Latin America. Energy company crisis represents 65 per cent of annual public debt.

Bkerke (AsiaNews) - In the middle of a regional crisis due to the Syrian conflict, burdened by its own political and security challenges, Lebanon faces even worse problems, a Greek-style economic meltdown by 2016, Maronite bishops said in an appeal to government leaders and the population that includes an analysis of the country's economic situation that does not seem to get the attention it needs.

The statement, issued on 1 August, warns against the state's "economic collapse" by 2016, similar to what is occurring in Greece and Italy as well as in some Asian and Latin American nations whose consequences could be very serious.

As an appeal, the statement by Maronite bishops is especially important. It is a special declaration that the Church hopes will be heeded.

The fact that the Catholic Church is behind the economic analysis is not unimportant. Citing John Paul Ii and Redemptor Hominis, the statement says that "man is the way for the Church" and that everything that touches him, in this case his material wellbeing and social situation, does not leave the Church indifferent.

Some might complain about such a stark warning, which will undoubtedly draw the attention of investors, but the latter are not asleep and it is appropriate to recognise that "to govern is to foresee."

Lebanon's dual problem

The statement noted that the country is facing two major socio-economic problems, an energy crisis and the debt problem.

The first is not specific to Lebanon, but affects the entire world, and is caused by unstable oil prices. This is affecting the country's electrical supplies and the competitiveness of its manufacturing, agriculture and service sector. Natural and man-made disasters are an additional challenge. Output flows are also affected by regional conflicts.

The chronic deficit problem at Electricité du Liban (EDL) represents 65 per cent of the country's annual deficit.

However, Lebanon's main problem is the national debt and the need to service it. This cuts into the amount of funds available for productive investments.

Some experts are saying that by 2016 the public debt could reach US$ 80 billion. Lebanon would face major financial difficulties given the ratio between servicing the debt and gross domestic production (GDP).

The bishops' appeal speaks of a "collapse" similar to that of nations richer than Lebanon, like Italy and Greece.

To avoid that danger, the statement calls for a number of measures, such as the creation of a special fund to manage the public debt, stronger ties between the public and the private sectors, as well as better tax and fee collection, etc.

At the same time, the appeal urges the banking sector, whose strength is a matter of national pride, to remain vigilant and rational in extending credit to the state, so as not to undermine personal savings, and avoid the sovereign debt crisis that affects some Asian and Latin American nations.

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