The Lebanese Business Leaders Association (RDCL): We welcome the Maritime Boundary Demarcation Agreement, a step towards stability and peace, and stress the need for Sound Governance through the Establishment of a Lebanese National Petroleum Endowment Fund, and Concluding an Agreement with the International Monetary Fund which Remains Necessary and Urgent
October 18, 2022
Beirut 18 October, 2022: The Lebanese Business Leaders Association (RDCL) board of directors held a meeting and unanimously welcomed the agreement pertaining to the demarcation of the maritime borders, which occurs in times of extreme difficulties for Lebanon. Awaiting the final ratification of the concerned parties, RDCL considers this agreement to be a historical milestone on both the local, regional and international levels. It undoubtedly constitutes a highly important step towards the achievement of geopolitical stability in the East Mediterranean Sea. Moreover, this agreement will contribute to the aspiration of the Lebanese nation, people, and private sector to achieve stability and peace. The latter are considered being two important pillars to reignite economic growth and ensure social stability. In the same context, RDCL insists on the necessity of the legislation, by the Lebanese parliament, of the best governance model with regards to the use of potential future proceeds of the hydrocarbon resources, through the establishment of a Lebanese national petroleum endowment fund, similar to the ones used in Northern Europe. This model will constitute a guarantee to the proper use of the future proceeds in a sustainable and transparent way, and following ethical principles and guidelines. This endowment fund should also function as a fiscal guiding policy tool, which serves to limit governmental spending by using a limited amount of the funds returns, while preserving the fund capital and increasing its value overtime. Moreover, RDCL considers that diversifying the potential fund investments internationally, could protect Lebanon against future economic dangers such as inflation, and limit the effect of potential future petroleum shocks on the local economy. This international investment diversification will also preserve the local economy from overheating artificially by preventing Lebanon’s reliance on hydrocarbons supplies on the long run. RDCL insists that this agreement doesn’t exempt Lebanon from the necessity of adopting the necessary and long-awaited reforms, and start their implementation immediately. As a matter of fact, this agreement, despite its importance, doesn’t replace in any form the necessary reforms. It is worth mentioning that initiating the reforms has increased in terms of urgency and importance, especially in light of potential future petroleum revenues. Finally, RDCL stresses the necessity to immediately conclude a fair deal with the IMF, hence unlock access to international financial markets. The IMF program remains the obligatory prerequisite to reignite confidence and growth in Lebanon. In conclusion, the RDCL indicates that it will be organizing in the near future several workshops that tackle the models of governance for the national petroleum endowment fund, and will call on all the interested and concerned parties to participate.