DUBAI: Lebanon's 2019 draft budget, which the government still needs parliament to endorse, is the beginning of a five-year economic recovery process that aims to cut the fiscal deficit to 7.5 per cent this year and revive its tourism industry, its prime minister said, report agencies.
“This budget is the beginning of a long road that we decided to take in order to lead the Lebanese economy to safety,” Saad Hariri, said in a statement late Saturday. “The 2020 budget will not take that much [time to prepare], because now we know what we want to do [until 2023].”After prolonged debate that required 19 cabinet meetings, Lebanon's government finally endorsed this year's budget with the goal of reducing the country's ballooning fiscal gap and averting a financial crisis. Mr Hariri’s cabinet is trying to reduce the budget deficit from a current 11.5 per cent of gross domestic product (GDP) through spending cuts and increasing taxes.
The push to get the draft budget approved by the cabinet was repeatedly delayed over the last few weeks. One more meeting will be held at the presidential palace on Monday, according to reports, before the draft is referred to parliament for approval, which is critical as lawmakers in the past have rejected draft budget proposals by the government. Lebanon was without a budget from 2005 to 2017.
With its debt-to-GDP ratio at 150 per cent, Lebanon is among the world’s most indebted countries in the world, behind countries such as Japan, Venezuela and Sudan. Beirut needs to manage its finances and implements necessary structural reforms to able to access about $11 billion (Dh40.4bn) in loans and grants pledged by international donors at the Cedre conference in Paris last year. The funds will mainly help fund infrastructure projects.
These pledges are linked to reforms of Lebanese economy including implementing austerity measures, improving revenue collection mechanisms, reducing debt and lowering the fiscal deficit by 1 percentage point annually over five years among other measures.