Lebanon must send message ‘of seriousness’ by approving budget: Finance minister

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Lebanon’s finance minister said on Monday it was important the country send a “clear message of seriousness” in the coming days by approving the 2019 state budget that aims to slash the deficit.

Approved by cabinet last month, the budget is being debated in parliament and aims to narrow the projected deficit to 7.6% of GDP from 11.5% last year.

It is seen as a critical step toward warding off a crisis which top leaders have warned is bearing down on Lebanon unless it carries out reforms. Lebanon’s public debt burden, equivalent to about 150% of GDP, is one of the heaviest in the world.

Finance Minister Ali Hassan Khalil, in comments to Reuters, also said an International Monetary Fund (IMF) mission had arrived in Lebanon to prepare an Article IV report on the financial and monetary situation in the country.

“The most important thing in the coming days is that we give a clear message of seriousness in completing the budget and approving it and that the 2020 budget comes to complete the steps proposed for this year,” Khalil said.

He said the IMF report should be complete by mid-July, describing it as a “fundamental juncture with a great effect on assessing the situation and its stability, and Lebanon’s rating by the concerned institutions.”

Khalil said international institutions had welcomed measures set out in the draft budget “but in the discussion there is always fear about the extent of the Lebanese government’s commitment to the measures approved by cabinet.”

The draft budget includes a cut in public debt servicing through the issuance of low-interest rate treasury bonds to the value of 11 trillion Lebanese pounds ($7.3 billion) in coordination with the Lebanese banking sector, the finance minister has said.

Khalil also said on Monday that all parties remained committed to the agreement, implementation of which was expected to begin.

“This matter is consensual with mutual understanding and the main element of it is Banque Du Liban,” he said, in reference to the central bank.

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