J05-0027 CDR MAG Eng
11/08/2005
02:31 PM
Page 137
Financing the reconstruction plan 137
CDR July 2005
Financing the
reconstruction plan
Secured financing
Foreign financing secured for the reconstruction program includes loan agreements ratified by Parliament,
loan agreements signed by the government and grant
agreements put into effect pursuant to government
decrees. By the end of 2004, the total amount of
secured foreign financing was US$ 5845 million,
composed of grants, soft loans, commercial loans,
(1)
export credits and medium-term loans, broken down
as follows:
Grants
Loans
Total
Soft loans Others Sub Total
Amount in
million US$
% of total
863
2492
2490
4982
5845
15%
43%
42%
85%
100%
CDR adopts a general financing policy whereby soft
loans are usually secured for social sectors, while
commercial loans are earmarked for high profitability
(productive) sectors and projects. However, CDR is
not the only establishment responsible for implementing the reconstruction program. Several other ministries and government administrations also participate in implementing various parts of the said program.
Distribution of secured foreign financing by source:
At present, about 30 foreign financing sources have
contributed to the reconstruction program. Chart 1
shows the share of each source contributing more than
US$50 million to the program. It should be noted that
10 main foreign financing sources have contributed
more than 90% of the total foreign financing, namely:
The World Bank (14%), the European Investment
Bank (14%) the Arab Fund for Economic and Social
Development (AFESD) (13%), (11%), Kuwait and
Kuwaiti institutions (10%), the Islamic Development
Bank (IDB) (10%), Saudi Arabia and Saudi institutions (EC) (7%), the European Community (EC)
(7%), Italy (6%), France and French institutions (6%)
and Commercial Banks (5%).
Distribution of secured foreign financing by sector:
Chart 2 shows the distribution of secured financing to
date based on the main sectorial groups. The share of
physical infrastructure sectors is 37% and covers
mainly the electricity and road sectors. The share of
social and economic sectors amounts to 17% and
covers education, health and environmental sectors.
The share of basic services stands at 22% and covers
water supply, wastewater and solid waste sectors. The
share of productive and other sectors amounts to 24%
and includes agriculture, seaports and the airport
which is the largest beneficiary of this financing.
New financing
Foreign financing secured in 2004 reflects the efforts
made by CDR in its endeavor to translate foreign
financing promises into secured financing. This only
requires fulfillment of certain legal and administrative
procedures to bring it into effect ( ). Total foreign
financing secured during 2004 amounted to about
US$ 157 million. The main loan agreements that were
either signed or ratified in 2004 are shown below.
The European Union (EU): On March 4, 2004, the EU
signed a cooperation agreement to implement the
MEDA II Indicative National Financing Plan (20022004) that took the form of grants (80 million euro).
In addition to the agreements signed in 2003 for 30
million euro, the Lebanese government signed additional agreements for 28 million euro, allocated as follows:
• On January 14, 2004, the Lebanese government
signed a grant agreement with the European
Commission (EC) (1 million euro) to support the
civil society in Lebanon under the “Afkar“ (Ideas)
project. The project aims to promote the work of community based organization in the areas of dialogue
among communities, promoting exchange of ideas
and mutual understanding among various society
members, as well as improving awareness of nature
and potential of civil social work with the aim of
developing future activities in this field.
• On March 10, 2004, the Lebanese government
signed a grant agreement with the EC (10 million
euro) for an agricultural development project. This
project aims at augmenting the incomes of small and
medium sized farmers, and in general raising the
income of the rural community through both the
J05-0027 CDR MAG Eng
138
11/08/2005
02:31 PM
Page 138
Financing the reconstruction plan
Chart 1
Ratified Signed & Approved Foreign Financing $5,845 million
Distribution by Donor
Chart 2
Ratified, Signed & Approved Foreign Financing $5,845 million
Distribution by Sector
CDR July 2005
J05-0027 CDR MAG Eng
11/08/2005
02:31 PM
Page 139
Financing the reconstruction plan 139
CDR July 2005
quantitative and qualitative improvement of agricultural products, and the adoption of new marketing
methods.
• On July 23, 2004 the EC gave a grant (17 million
euro) for the Integrated Small and Medium Enterprise
(SME) Support Program, implemented in cooperation
with the Ministries of Economy and Trade, and
Agriculture. This project aims at developing an
approach that links the establishment of a new appropriate methodologies, together with training and services for launching of new small and medium sized
business ventures and supporting existing businesses.
The program also includes financing tools.
In addition to the above three grant agreements (28
million euro), the EC pledged 9 million euro exempted from interests for the South Lebanon Sewage
Disposal agreement signed with EIB. This amount is
additional to the 22 million euro pledged for environmental protection within the MEDA II Indicative
National Financing Plan for 2002-2004.
European Investment Bank (EIB): On July 20, 2004
the Lebanese government signed a loan agreement
with EIB (45 million euro) for the South Lebanon
Sewage Disposal Project. This loan will finance the
construction of a wastewater treatment plant and associated seafall in addition to wastewater collection networks in the Sour area. On December 24, 2004 another agreement was signed with EIB (60 million euro)
allocated for private sector loans (Apex Global LoanMulti Sector).
Italian government: The Italian government provided
a grant (3.5 million euro) for the support of health
sector reorganization in Lebanon. The agreement was
signed on July 14, 2004.
United Nations Organizations: CDR signed two
financing agreements with UNDP and UNPF in the
form of grants ( US $ 250,000), allocated as follows:
• Financing agreement with UNPF (US$ 150,000) for
developing preparatory and promotional activities to
incorporate demographic education in school curricula and activities.
• Financing agreement with UNDP (US$ 100,000) to
support the Legal Research and Documentation
center.
Future Financing
The foreign financing CDR expects to secure include
initially approved financial agreements and loans
promised through expressions of intent. Other loans
currently under negotiation are not included in this
section.
Based on the above, the total approved financing
amounted to US$ 652 million at the end of 2004, distributed as follows:
Grants
Loans
Total
Soft loans Others Sub Total
Amount in
million US$
% of total
45
473
134
607
652
7%
73%
20
93%
100%
The breakdown of expected foreign financing at the
end of 2004 was as follows:
Approved financing: US$ 413 million (68%); promised financing: US$ 194 million (32%). It should be
noted that several projects were proposed to foreign
financing sources and negotiations are ongoing for
securing the required loans.
Distribution of expected foreign financing by source:
Chart 3 shows the distribution of expected foreign
financing by source at the end of 2003. This chart
shows that 11 sources contributed more than 95% of
total expected foreign financing, namely: The Italian
government (17%), IDB (16%), AFESD (16%), EIB
(13%), Saudi Arabia and its institutions (8%), Islamic
Republic of Iran (7%), United Arab Emirates and its
institutions (6%), France (6%), EU (5%), Germany
(3%), world Bank (3%).
Distribution of expected foreign financing by sector:
Chart 4 shows the distribution of expected foreign
financing by main sectors. The share of basic physical infrastructures was 14% allocated to roads. The
share of socio-economic sectors amounted to 17 %
allocated to education, public health, social affairs
and the environment. The share of the basic service
sectors was 18% out of which the wastewater sector
obtained the major portion. The share of productive
and other sectors amounted to 51% distributed among
agriculture, tourism and administrative support.
Main sources of expected foreign financing: Below is
a summary of the main financing agreements expected to be finalized during the coming year, detailed
according to sources:
Arab Fund for Economic Social Development
(AFSED): AFESD agreed to lend Lebanon 30 million
Kuwaiti Dinars (about US $ 101.8 million) to finance
the rehabilitation of the main road networks in
Lebanon. This agreement is expected to be signed at
J05-0027 CDR MAG Eng
140
11/08/2005
02:31 PM
Page 140
Financing the reconstruction plan
Chart 3
Agreed & Promised Foreign Financing $652 million
Distribution by Donor
Chart 4
Agreed & Promised Foreign Financing $652 million
Distribution by Sector
CDR July 2005
J05-0027 CDR MAG Eng
11/08/2005
02:31 PM
Page 141
CDR July 2005
the beginning of 2005. The project covers upgrading
six main road intersections in Beirut including overpasses and underpasses; consturction of the section of
Metn expressway between Nahr el Maout and
Baabdat; Haret Hreik - old Airport road connection;
Saida seafront Boulevard; Hadath – Choueifat road,
and Hazmieh – Mharles Malek Boulevard conncetion.
Saudi Fund for Development (SFD): SFD promised
approximately US$ 49 million for financing the following projects:
• SR 5 million (US$1.3 million) for street lighting in
Beirut and its suburbs.
• US$ 15 million for construction of several roads in
Akkar.
• re-allocation of US$ 15 million, within existing
agreements, for construction of certain faculties
within the Lebanese University Complex in North
Lebanon.
• SR 41.25 million (about US $ 11 million) for construction of Saadiyat Zaaerourieh road in Iklim al
Kharroub.
• SR 26.25 million (about US 7 million) for the construction of a road in Tannourine - Batroun
Abu Dhabi Development Fund (ADDF): Preparations
are underway to sign four financing agreements with
ADDF for 137.7 million Emirate Dirhams (about US$
37.5 million). These include rehabilitation and extension of potable water networks in Nabatieh, construction of two overhead bridges in Beirut, wastewater
networks and treatment plants in Koura and Ehdein,
and construction of wastewater networks and treatment plant in North Metn.
Islamic Republic of Iran: The Islamic Republic shall
sign a new agreement with Lebanon (45 million euro)
as the second phase under the Iranian Protocol (US $
100 million). This phase shall finance the construction
of Nabatieh – Marjayoun road; construction of a railway line from Tripoli to Abboudieh on the Syrian
boarders; construction of a slaughterhouse in
Nabatieh, water supply and wastewater project in the
Shouf area.
Islamic Development Bank (IDB): The total amount
of loans that will be agreed on with IDB is about US$
109 million, the most important of which are:
• US$ 12.6 million for water supply projects in Bint
Jbeil, Marj al-Khokh and Cheba'a.
• US $ 12.2 million for rehabilitation of the Sour –
Financing the reconstruction plan 141
Nakoura road included under the item of construction
and rehabilitation of roads project (US $ 22.5 million), allocated within the framework of the loan
agreement aiding liberated South Lebanon. It is
expected that an greement will be approved to allocate the remaining amount of the loan for rehabilitation of Bint Jbeil- Edaisseh road; Zaghlah- ChwayaChabaa road; Ghandourieh- Marjayoun roads.
• US $ 12.5 for equipping several health care centers
(Khiyam, Rmeish, Cheba'a) and hospitals in South
Lebanon (Bint Jbeil, Jezzine - Tibnine).
• US$ 14.6 million for the construction and equipping
of several of public primary schools in West Bekaa
and several secondary schools in South Lebanon and
West Bekaa, including procurement of supplies and
laboratories.
• IDB promised to finance (US $ 7 million) the construction of the Bcharre road interchanges.
• IDB promised to finance (US $ 14.6 million) the
construction and equipping of a new modern slaughterhouse in Beirut.
• IDB promised to finance (US $ 32.4 million) two
sections of the southern coastal expressway, i.e. the
Bablieh – Abou el Asward and Abou el Aswad-Bourj
Rahhal sections.
• IDB promised to donate a grant (US $ 180,000) to
the Dar al Mahabbe orphanage in Akkar.
The World Bank (IBRD): Preparations are underway
for finalizing the 2005-2007 financing plan with the
World Bank. This plan (US $ 200 million) covers
three main sectors including strengthening the institutional capacity of several administrations, poverty
alleviation and resource and environmental management. The agreement will be finalized this year upon
evaluation of the projects with the various concerned
ministries and administrations.
The European Union (EU): Discussions have been
conducted for donating a grant (50 million euro) to of
finance the primary national program (2005-2006).
The relevant agreement is expected to be signed
during this year.
European Investment Bank (EIB): Negotiations have
been conducted with EIB for singing two agreements
(60 million euro) to finance the Expressways Projects.
The project includes the construction of the Taanail –
Masnaa connection of the Arab Highway and the AL
Mina- Badawi connection of the west ring road,
Tripoli.
On the other hand, an IDB is expected to visit
J05-0027 CDR MAG Eng
142
11/08/2005
02:31 PM
Page 142
Financing the reconstruction plan
Chart 5
Foreign Financing (Total) $6,497 million
Distribution by Donor
Chart 6
Foreign Financing (Total) $6,497 million
Distribution by Sector
CDR July 2005
J05-0027 CDR MAG Eng
11/08/2005
02:31 PM
Page 143
CDR July 2005
Lebanon this year to evaluate the wastewater project
for Greater Beirut in which IDB may contribute up to
60 million euro,
The French Agency for Development (AFD):
Negotiations are underway with ADF for financing
potable water and wastewater projects in the North.
The project includes construction of a wastewater
treatment plant in Koura together with the relevant
collector lines, in addition to collector lines in Chekka
and Batroun. Financing will also cover the potable
water project in Ehden and completion of the Tripoli
Water Authority management contract.
The Federal German Government: The German government will sign an agreement of cooperation with
Lebanon for 16.2 million euro (about US $ 22 million) to finance the wastewater disposal project in Al
Ghadir.
Italian Governments: Negotiations are currently undaway, within the framework of the Italian financial
Protocol of 1998, to finance the wastewater project in
the Caza of Jbeil (39 million euro). Another agreement is under preparation for financing the Cultural
Financing the reconstruction plan 143
Heritage and Archaeological Sites Protection Project
in Sour and Baalbeck (10 million euro), in addition to
the poverty alleviation project (10 million euro).
The Italian government has also promised to donate a
grant (670,000 euro) to support the second phase of
the National Nursing Program.
UN organizations: UNDP is expected to allocate
grants (about US $ 300,.000) to support common
projects with CDR related to the areas of local development, gender, combating corruption, promoting the
return of Lebanese expertise (Tokten) and the Human
Resources development report.
Overview of foreign financing (secured and expected)
Charts 5 and 6 demonstrate the total value of foreign
financing designated according to sources and sectors. These two charts show the amount of expected
foreign financing, sectorial preferences for Lebanon
and their foreign financing sources. It should be
emphasized that discussions conducted with foreign
financing sources are an ongoing process, and that
this overview reflects the situation at the end of 2004.
J05-0027 CDR MAG Eng
144
11/08/2005
02:31 PM
Financing the reconstruction plan
Page 144
CDR July 2005
J05-0027 CDR MAG Eng
CDR July 2005
11/08/2005
02:31 PM
Page 145
Financing the reconstruction plan 145
J05-0027 CDR MAG Eng
146
11/08/2005
02:31 PM
Financing the reconstruction plan
Page 146
CDR July 2005
J05-0027 CDR MAG Eng
CDR July 2005
11/08/2005
02:31 PM
Page 147
Financing the reconstruction plan 147
J05-0027 CDR MAG Eng
148
11/08/2005
02:31 PM
Financing the reconstruction plan
Page 148
CDR July 2005
J05-0027 CDR MAG Eng
CDR July 2005
11/08/2005
02:31 PM
Page 149
Financing the reconstruction plan 149
J05-0027 CDR MAG Eng
150
11/08/2005
02:31 PM
Financing the reconstruction plan
Page 150
CDR July 2005
J05-0027 CDR MAG Eng
CDR July 2005
11/08/2005
02:31 PM
Page 151
Financing the reconstruction plan 151
J05-0027 CDR MAG Eng
152
11/08/2005
02:31 PM
Financing the reconstruction plan
Page 152
CDR July 2005