Lebanon has taken a sound path with reforms in its 2019 draft budget and power sector but it will have to keep going, World Bank MENA vice president Ferid Belhaj said on Friday in Beirut.
The bank and other donors helped arrange pledges of $11 billion in soft loans and aid at a Paris conference last year to build new infrastructure. But the money depends on the Lebanese government launching reforms it has put off for years and tackling its huge debt burden.
“In general ... we are optimistic, but at the same time our optimism is cautious because of the economic situation in the region,” Belhaj was cited as saying in a statement from Lebanese Prime Minister Saad al-Hariri’s office after the two met.
Parliament is debating the 2019 draft budget approved by the cabinet last month, a critical test of Lebanon’s will to enact reforms. Leaders have warned of a financial crisis if there are no changes.
The budget aims to cut the deficit to 7.6% of gross domestic product from 11.5% last year. Lebanon has one of the world’s largest public debt burdens at 150% of GDP.
Al-Hariri plans to use the funds from the Paris donor meeting for a 10-year capital investment program that would boost low growth. The country also has plans for about 250 projects which include transport, water and power sectors.
International Monetary Fund officials, who also met al-Hariri on Friday, urged Lebanon to speed up the process of implementing the projects and program, the premier’s office said.
“Lebanon is going down a sound path when it comes to the reforms at the level of the budget and electricity ... but the reforms do not end. They are continuous,” Belhaj said.
The government approved an electricity plan in April that aims to boost generation capacity and bring down subsidies straining state finances.