VZCZCXRO8839
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHDH RUEHIK RUEHKUK RUEHLZ RUEHROV
RUEHSR
DE RUEHLB #0664/01 1661307
ZNR UUUUU ZZH
R 151307Z JUN 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5126
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 000664 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ELA AND EEB/IFD/ODF 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID LAUDATO/NANDY/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/AHERN 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR SHAPIRO/MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EAIR EIND PGOV KFLU LE
SUBJECT: LEBANON: CABINET FINALLY APPROVES 2009 BUDGET; SENDS TO 
PARLIAMENT (ECONOMIC WEEK IN REVIEW, JUNE 8 - 14, 2009) 
 
CONTENTS 
-------- 
 
-- CABINET APPROVES THE 2009 BUDGET 
-- ELECTION RESULTS WELL RECEIVED BY FINANCIAL SECTOR, ALL AWAIT 
CABINET FORMATION 
-- CAMPAIGN SPENDING ESTIMATED AT OVER $500 MILLION, MORE THAN 
100,000 CAME TO VOTE 
-- FIVE NEW SWINE FLU CASES ARE TREATED, NO CHANGES TO BAN ON LIVE 
PORK IMPORTS 
-- TELECOM MINISTRY REDUCES FEES TO ENCOURAGE BROADCAST TRANSMISSION 
FROM LEBANON 
 
 
2009 BUDGET PASSES 
-------------------- 
 
¶1. (SBU) After almost six months of heated discussions, the cabinet 
approved the 2009 budget during its June 12 session.  The budget 
projects a deficit of approximately 30% of spending and around 10% 
of GDP.  The budget includes appropriations for the Council of the 
South of around $40 million -- the reason for the budget's delay and 
subject of a dispute between Prime Minister Siniora and Parliament 
Speaker Berri -- in a move which may be interpreted as a victory for 
Berri. 
 
¶2. (SBU) The budget still requires parliamentary approval, and while 
the newly elected parliament may take up the 2009 budget law when it 
convenes, it still has not passed the 2006, 2007, and 2008 budgets, 
which may have to be considered first.  In any event, the GOL has 
been spending funds using treasury advances and off-budget spending 
instruments, so whether or not parliament passes the budget, the 
government will continue to function. 
 
ELECTION RESULTS WELL RECEIVED BY FINANCIAL SECTOR, 
ALL AWAIT CABINET FORMATION 
-------------------- 
 
¶3. (SBU) Financial markets welcomed the results of the June 7 
parliamentary elections.  The Beirut Stock Exchange (BSE) saw 
increased trading of Solidere -- the real estate company whose 
shares account for 85% of BSE trading -- and bank shares in terms of 
value and volume on June 9 compared to previous months, BSE 
president Dr. Fadi Khalaf told us.  Khalaf attributed this to the 
elections having taken place peacefully, and the March 14 victory 
(i.e. the continuation of international support to Lebanon), which 
has also reflected positively on the trading of Global Depository 
Receipt (GDRs) on the BSE and London markets.  The BSE continued to 
see increased activity throughout the week, though the pace may slow 
in advance of the upcoming cabinet formation, Khalaf said. 
 
¶4. (SBU) Bank sources told us demand for Lebanese Lira (LL) picked 
up following the elections as depositors resumed converting dollar 
deposits to benefit from higher interest rates on LL deposits.  This 
is a normal reaction to peaceful parliamentary elections, they said, 
adding that some more time is needed to see whether this positive 
trend continues.  The money market also reacted positively to the 
outcome of the elections, with great demand for Lebanese paper on 
June 9, Central Bank Head of Financial Operations Dr. Youssef el 
Khalil told us.  Khalil also noted that demand could be affected by 
the time it takes to form and the composition of the next cabinet. 
 
¶5. (SBU) Meanwhile, economic advisor to Parliament Speaker Berri Dr. 
Ghazi Wazni said the primary results of the elections were positive 
for the economic and financial climate, reflected in the substantial 
rise in the price of Solidere shares on June 9.  He said the GOL's 
main economic challenges will include: (a) social disruption and 
rising unemployment (which he estimates will exceed 17% in 2009); 
(b) imbalances in the financial situation, the level of public debt, 
the 2010 budget law; and (c) Paris III reforms (electricity, health, 
privatization, fiscal reforms).  Prominent economic consultant Dr. 
Toufic Gaspard said reactions to the elections are positive, but he 
does not expect a significant change in economic policy in the next 
cabinet.  Gaspard said that forming the new cabinet will be 
difficult and, like the previous cabinet, he does not expect it to 
give priority to economic issues. 
 
CAMPAIGN SPENDING ESTIMATED AT OVER $500 MILLION, 
 
BEIRUT 00000664  002 OF 002 
 
 
MORE THAN 100,000 CAME TO VOTE 
-------------------- 
 
¶6. (SBU) On June 3, Sabine Oueiss, economic reporter in moderate 
anti-Syrian An-Nahar newspaper and close to government circles, 
reported that economic experts estimate electoral spending to have 
exceeded half a billion U.S. Dollars in cash payments, payment of 
hospital bills, and other personal services for constituents.  This 
also includes the purchase of airline tickets and lodging for 
expatriates coming to vote, transportation costs for Lebanese 
expatriate voters arriving via the Syrian border, as well as 
transportation to the polling stations. 
 
¶7. (SBU) Georges Ghanem, news director at moderate television 
station LBCI, told us June 3, quoting Middle East Airlines Chairman 
Mohammad El-Hout, that 136,000 Lebanese immigrants came to Beirut to 
vote.  Meanwhile, Civil Aviation director general Hamdi Chaouk told 
us June 12 that it is not easy to estimate the number of Lebanese 
immigrants who came just to vote.  He said a large number of 
Lebanese, who lost their jobs due to the global crisis, mostly in 
the Gulf, returned to Lebanon in the first week of June, which also 
coincided with the end of the school year.  But Chaouk noted that 
the number of private and chartered planes that landed at Beirut's 
international airport doubled in the first week of June 2009, 
compared to the corresponding period in June 2008. 
 
FIVE NEW SWINE FLU CASES ARE TREATED, 
NO CHANGES TO BAN ON LIVE PORK IMPORTS 
-------------------- 
 
¶8. (SBU) Press reported that five new cases of swine flu were 
confirmed in Lebanon.  An advisor to the Minister of Health told us 
June 10 that five people, one from the U.S. and four from Australia, 
arrived in Lebanon last week and notified the authorities at the 
airport of their high fever.  They were all treated and have now 
fully recovered.  This proves that swine flu can be mild and not 
necessarily deadly if treated quickly and appropriately, she said. 
 
¶9. (SBU) The Ministry of Agriculture (MOA) does not plan to amend 
its April 27 decision banning the importation of live pork products 
and pork carcasses (except for processed and manufactured pork 
products), a MOA contact told us June 11. 
 
TELECOM MINISTRY REDUCES FEES TO ENCOURAGE 
BROADCAST TRANSMISSION FROM LEBANON 
-------------------- 
 
¶10. (SBU) On June 10, Antoine Boustani, an advisor to the Minister 
of Telecommunications (MOT), told us the MOT has reduced fees for 
occasional video and audio transmission from Lebanon by 45% starting 
early June.  This measure aims to make Lebanon competitive with 
neighboring Arab countries, and thus encourage local, Arab, and 
international stations to broadcast from Lebanon.  This measure will 
increase state revenues and create jobs, Boustani remarked. 
 
SISON