|11 July, 2019

Lebanese parliament aims to cut budget deficit further-local media

The IMFsaid that based on the government's budget plan, it estimated the heavily indebted state would record a 2019 deficit equivalent to around 9.75% of GDP.

Lebanese members of parliament gather to elect the new Lebanese president in the parliament building in downtown Beirut April 23, 2014.

Lebanese members of parliament gather to elect the new Lebanese president in the parliament building in downtown Beirut April 23, 2014.

REUTERS/Joseph Eid/Pool

BEIRUT - The Lebanese parliament's budget committee said on Thursday it had finished studying the government's 2019 budget plan and had found ways to reduce the deficit from a proposed 7.6% of gross domestic product to 6.6%, several Lebanese media reported.

The International Monetary Fund said this month that based on the government's budget plan, it estimated the heavily indebted state would record a 2019 deficit equivalent to around 9.75% of GDP. 

Speaking at a news conference, the committee's chairman Ibrahim Kanaan urged Lebanon's coalition government to quickly start preparing a state budget for 2020, Voice of Lebanon radio station reported.

Parliament must approve the budget before it can become law, a process that the government had initially hoped would be completed by the end of June.

The budget is seen as a critical test of Lebanon's ability to confront years of economic mismanagement that has led it to accumulate one of the world's heaviest public debt burdens, equivalent to around 150% of GDP.

The IMF's Article IV mission to Lebanon said the budget plan, which includes cuts in spending and new revenue sources, and reforms to the heavily subsidised electricity sector, were "first steps on a long path" to rebalancing the economy.

It urged the government to identify and enact more lasting cuts in spending and increases in revenue, and said it needed to move towards a primary surplus - which excludes debt servicing costs - of around 4.5% of GDP from a small primary deficit now over the medium-long term.

(Reporting by Angus McDowall; Editing by Toby Chopra) ((angus.mcdowall@thomsonreuters.com; Reuters Messaging: angus.mcdowall.thomsonreuters.com@reuters.net))

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