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Cablegate: Lebanon: Gol Approves New Epca (Economic Week in Review,

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RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #1605/01 3150755
ZNR UUUUU ZZH
R 100755Z NOV 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3481
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 001605

SENSITIVE

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STATE FOR NEA/ELA
STATE PASS USTR FRANCESCKI
STATE PASS USAID BEVER/LAUDATO/SCOTT
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT

E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: GOL APPROVES NEW EPCA (ECONOMIC WEEK IN REVIEW,
NOVEMBER 3 - 9, 2008)

CONTENTS
--------

-- GOL APPROVES NEW EPCA; DISCUSSES 2009 BUDGET AND DEVELOPMENT
ISSUES
-- DOLLARIZATION OF DEPOSITS CONTINUES TO DECLINE
-- LEBANON RECEIVES WORLD BANK GRANT FOR SOCIAL REFORM
-- UNDP LAUNCHES ENERGY EFFICIENCY PROJECT
-- CASH TRANSFERS UP BY 38 PERCENT IN FIRST HALF OF 2008
-- LEBANON IMPROVES SLIGHTLY IN BASIC CAPABILITIES INDEX


GOL APPROVES NEW EPCA;
DISCUSSES 2009 BUDGET AND DEVELOPMENT ISSUES
--------------------

1. (SBU) On November 3, the cabinet approved the signing of the
IMF's Emergency Post Conflict Assistance (EPCA) II program, and
informed the IMF of this decision. During the cabinet session,
Chatah also gave a presentation of the 2009 budget proposal, which
will be discussed at a separate session, Chatah's office told us.

2. (U) On November 6, the cabinet discussed the "National Physical
Master Plan of the Lebanese Territory" presented by the Council for
Development and Reconstruction (CDR), an autonomous entity under the
PM's office in charge of large projects. The Master Plan includes
major public infrastructure projects taking into consideration
sustainable development and environmental protection. The Master
plan, which was completed in 2005, has been waiting since then for
cabinet's endorsement. At the November 6 meeting, the cabinet
formed two committees, one headed by Deputy PM Abu Jamra to submit
recommendations regarding the Master Plan before the end of the
month, and the other committee headed by the PM to look at current
projects under implementation by the CDR and other government
institutions, a senior source at CDR told us.

DOLLARIZATION OF DEPOSITS
CONTINUES TO DECLINE
--------------------

3. (U) During his monthly meeting with the Association of Banks in
Lebanon on November 4, Central Bank of Lebanon (CBL) Governor Riad
Salameh said the dollarization of deposits currently stood at 71
percent, compared to 73.5 percent in September. Salameh said that
this was a clear testimony to the confidence in the Lebanese
financial and monetary system. Salameh also welcomed the start of
the use of the International Bank Account Number (IBAN) -- an
international standard for identifying bank accounts across national
borders -- by Lebanese banks.

LEBANON RECEIVES WORLD BANK
GRANT FOR SOCIAL REFORM
--------------------

4. (U) Press reported November 6 on the signing of an agreement
between Finance Minister Mohammad Chatah and the World Bank (WB)
representative in Lebanon Hedi Larbi of a six million dollar grant
for social sector reform, part of the WB's Paris III pledges. The
grant will be allocated as follows: $2.5 million for the National
Social Security Fund, one million for the Ministry of Education,
$1.25 million for the Ministry of Social Affairs, $740,000 for the
Ministry of Public Health; while the remaining $510,000 for a
committee in charge of supervising the implementation of the
projects, based at the PM's office.

UNDP LAUNCHES ENERGY
EFFICIENCY PROJECT
--------------------

5. (U) On November 4, the UNDP launched the implementation of its
"Community Energy Efficiency and Renewable Energy Demonstration
Project" (CEDRO), in cooperation with the Ministries of Energy and
Water, Finance, and the Council for Development and Reconstruction
(CDR) and funded by a $9.7 million grant from the Spanish
Government. In its first phase, the project will bring more energy
efficient lighting and water-heating systems, as well as better
insulation, to pre-selected public schools, hospitals,
municipalities, and social centers across Lebanon by June 2009. In
the next phase, the number of establishments will be increased by

BEIRUT 00001605 002 OF 002


2011, leading to the development of a national sustainable energy
strategy.

CASH TRANSFERS UP BY 38 PERCENT
IN FIRST HALF OF 2008
--------------------

6. (U) According to the Central Bank of Lebanon (CBL), electronic
cash transactions to and from Lebanon totaled $660.2 million in the
first half of 2008, or a 38.3 percent increase over the same period
last year. The UAE was the main source of incoming transfers, with
$104.3 million or 22.5 percent of total transfers, followed by Saudi
Arabia (16.2 percent), Qatar (nine percent), Australia (6.8
percent), and the U.S. (6.5 percent). The Philippines was the main
destination of outward transfers from Lebanon with $28.9 million or
14.7 percent of the total, followed by Ethiopia (12.2 percent),
Egypt (10.8 percent), Sri Lanka (7.6 percent), and India (4.2
percent).

LEBANON IMPROVES SLIGHTLY
IN BASIC CAPABILITIES INDEX
--------------------

7. (U) The NGO Social Watch's 2008 Basic Capabilities Index ranked
Lebanon 80 out of 185 surveyed countries and 8 out of 17 countries
in the MENA region in terms of social development and basic
well-being levels, a slight improvement compared to last year.
Social Watch noted that although Lebanon is a middle-income country,
one quarter of its population is considered poor, while five percent
live in extreme poverty, and almost half the population is not
covered by health insurance. Social Watch also noted large regional
disparities in poverty levels throughout the country, with areas
like the Bekaa, south and north Lebanon, and Nabatieh suffering the
most.

SISON

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