BEIRUT: A senior International Monetary Fund official on Wednesday urged Lebanon to reach a national consensus on economic reforms, warning that the public debt has reached alarming levels.

"Political consensus is needed to address the public debt," George Abed, special adviser to the IMF managing director, told The Daily Star on the sidelines of the final day of a conference on "Fiscal Reforms in the Arab Countries and the Near East."

He said Lebanon should begin more vigorous and painful reforms, which it promised during the "Paris II" donor meeting in November 2002, if the IMF was going to help the country.

The IMF's advice comes at a time when President Emile Lahoud and Prime Minister Rafik Hariri are deeply split on privatization and other important economic and political issues.

Abed emphasized that the IMF does not want to intervene in Lebanon's political affairs but expressed hope that there would be a national consensus on reforms.

"When I met Lahoud, Hariri and other top officials prior to Paris II, I noticed that all politicians supported the economic reforms," Abed said.

He added that Lebanon should not count on the cash and assets which came to Lebanon after Paris II.

"The longer Lebanon waits the more difficult it will become to overcome the problems."

The public debt, estimated at $33 billion, has slowed down the economy and reduced the government's spending on essential development projects.

The IMF, which took part in the Paris II conference, has voiced support for the government's five-year plans that were submitted to donor states.

But Lebanon failed to meet its commitment to Paris II due to political differences, which caused the debt to soar higher.

Hariri said on Tuesday that he intends to call for a Paris III conference in 2005, provided that the political climate becomes more suitable.

Some observers said that Hariri is waiting to see whether Syria, the main powerbroker in Lebanon, will renew Lahoud's term for the presidency.

Lahoud's term expires before the end of 2004.

Abed said that the Lebanese government has managed to some extent to increase revenues, although these steps were still not sufficient.

"We don't have a country which has high debt to GDP ratio like Lebanon. Even if the GDP was underestimated by 20 percent to 30 percent, the debt remains very high to GDP," Abed said.

Lebanon's debt to GDP ratio is over 186 percent, one of the highest ratios in the world.

Some Lebanese officials have argued that Lebanon's actual GDP is above the official figure of $17 billion, saying that if the remittances from expatriates were included, the official GDP would be even higher.

Abed said that public debts in most Arab states are not as serious as they are in Lebanon.

"Most Arab states that suffer public debts have enormous resources to cope with the problem," he said.

The IMF has praised Lebanon for its successful implementation of the value-added tax in 2002 and called on other regional states to follow Beirut's example in this consumer tax.

Commenting on the debate on privatization, Abed stressed the IMF repeatedly said it does not favor selling some of the state-owned assets at any price.

"We want to make sure that the public interest is well protected," he said.

But Abed added that privatization will help bring in more investments, especially in the telecom sector.

"Privatization should not be only viewed as a means to reduce the public debt, but rather to bring in more investments. Lebanon can become the telecom hub of the Middle East if this sector is privatized."