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“Independent and transparent:” the Chairman of the Finance and Budget Parliamentary Committee Ibrahim Kanaan insists on these two adjectives when describing the Sovereign Fund in which Lebanon will place the income it hopes to generate from the exploitation of its offshore gas and oil resources.
In an interview with This is Beirut, Kanaan explains the special status of this fund, the criteria which should guarantee its independence, as well as the methods of distribution of revenues into two separate portfolios.
It is recalled that, after long months of discussion, and while drilling in Lebanese waters is due to begin this month, the commission chaired by Kanaan finalized on Monday the bill relating to the creation of the Sovereign Fund, which still needs to be approved in a plenary session.
The Sovereign Fund is “a public institution but of a private nature, which is not under any institutional political influence,” Kanaan tells TIB, noting the “importance of independence and transparency in attracting investment, especially at the international level.”
“The independence of the Fund is guaranteed, in a large proportion, by the fact that the board of directors is composed of competent people with more than 10 years of international experience in this field,” he says. “The board has all the prerogatives related to the national investment strategy, that the board itself will prepare,” he adds. There will be an international audit as well, which contributes to guaranteeing the transparency of the fund, Kanaan emphasizes.
He explains that the revenues that will be generated will be divided in two portfolios, as is the case with all sovereign funds. “At least 75 percent of revenues will be placed in a savings and investment portfolio, dedicated to the future generations, and that will not be touched, while around 25 percent of the revenues will be placed in a portfolio that can be used for development projects in Lebanon,” Kanaan adds.
He expresses the hope that MPs will vote this bill in the next plenary session, regardless of any political or partisan factor, because of the exceptional financial circumstances that Lebanon currently faces.
Kanaan, who held a press conference on Wednesday, explained that the Fund board members will be chosen by the Council of Ministers from a list of candidates drawn up by the Civil Service Council, in cooperation with a private international recruitment company. The board will draw up its own rules of procedure, as well as its investment strategy.
Under the text approved by the committee – a synthesis of four legislative proposals, presented by parliamentary blocs belonging to different political groups – the Fund will meet international criteria, according to the Metn MP, who notes the importance of the role played by the Lebanese Petroleum Administration (LPA), as well as by the Norwegian expert in the establishment of Sovereign Wealth Funds Vidar Ovesen, in the elaboration of the bill.
