Rafic Hariri - 1992-1998 Economic Political Policies

1992-1998 Economic Political Policies

Hariri implemented an aggressive new economic policy. Perhaps Hariri's most important creation in the beginning of his career was "Horizon 2000" the government's name for its new rejuvenation plan. A large component of "Horizon 2000" was Solidere, the privately-owned construction company that was established to reconstruct post-war Lebanon. Solidere was owned by the government and private investors. Solidere was largely focused on redeveloping Beirut's downtown and turning it into a new urban center as quickly as possible as one aspect of the various infrastructure redevelopment plans that would be implemented by "Horizon 2000". Another aspect of the decade-long plan was the privatization of major industries. Numerous contracts were awarded in important industries such as energy, telecommunications, electricity, airports and roads. The last and perhaps most significant aspect of "Horizon 2000" was economic stimulus via foreign direct investment. Specifically, Hariri supported foreign firms and individuals taking an interest in Lebanon's developmental potential. Hariri simplified tax codes and provided tax breaks to foreign investors. Due to his previous successes in the private sector and the numerous resulting international connections, Hariri was able to garner a significant amount of low-interest loans from foreign investors. Hariri also pursued aggressive macroeconomic policy such as maintaining strict regulations on bank reserves and inter-bank interest rates to curb inflation and raise the value of the Lebanese pound relative to the dollar. Hariri's economic policies were a remarkable success during his first year in office. From 1992 to 1993 there was a 6 percent increase in real national income, the capital base of commercial banks effectively doubled, the budgetary earnings hovered at around a billion dollars, and commercial banks’ consolidated balance sheets increased about 25%. By 1998, however, real GDP growth was around 1%, a year later it would be -1%, national debt had skyrocketed 540% from two to eighteen billion dollars, Lebanon's economy was in a miserable state.