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|07 February, 2019

Indebted Lebanon commits to reforming state finances

Lebanon's new government approved a policy statement committing to reforms that are seen as critical to putting the heavily indebted state's finances on a sustainable path.

Lebanese Prime Minister Saad al-HarirI heads a meeting to discuss a draft policy statement at the governmental palace in Beirut, Lebanon February 6, 2019.

Lebanese Prime Minister Saad al-HarirI heads a meeting to discuss a draft policy statement at the governmental palace in Beirut, Lebanon February 6, 2019.

REUTERS/Aziz Taher

BEIRUT  - Lebanon's new government on Thursday approved a policy statement committing to reforms that are seen as critical to putting the heavily indebted state's finances on a sustainable path.

The statement sets the main policy objectives of Prime Minister Saad al-Hariri's national unity government, formed last week after nine months of wrangling over cabinet portfolios.

A draft of the statement seen by Reuters on Wednesday said the government would launch fast and effective reforms that could be "difficult and painful" to avoid a worsening of economic, financial and social conditions. 

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Information Minister Ibrahim al-Jarrah said on Thursday the government policy statement had been approved with amendments in "phrasing more than essence". It was drafted by a ministerial committee drawn from all the main factions.

Lebanon has one of the highest public debt-to-GDP ratios in the world, at around 150 percent.

International donor institutions and foreign governments want to see reforms before releasing some $11 billion in financial assistance pledged at a Paris conference last year.

Hariri aims to use the funds, mostly soft loans, for a capital investment programme that would boost low growth. Lebanon's economy has been hit by factors including years of regional turmoil, such as the war in Syria.

Hariri's government includes the heavily armed, Iran-backed group Hezbollah, which is deemed a terrorist group by the United States. Hezbollah has expanded its sway in the government, notably through naming the health minister.

(Writing by Tom Perry; Editing by Andrew Cawthorne) ((thomas.perry@thomsonreuters.com; Reuters Messaging: thomas.perry.reuters.com@reuters.net))

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