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Lebanese Leaders Meet to Find Solution to Economic Crisis

Lebanese Leaders Meet to Find Solution to Economic Crisis

Monday, 2 September, 2019 - 17:30
Lebanon's political leaders meet to find a solution to the country's economic crisis. (Dalati & Nohra)

Lebanon's political leaders met Monday with the aim of finding a solution to the country's economic crisis, raising concerns that more taxes will be imposed.

Lebanon has one of the world's highest public debts in the world, standing at 150% of GDP. Growth has plummeted and budget deficit reached 11% of GDP as economic activities slowed and remittances from Lebanese living abroad shrank.

The government hopes to bring down the budget deficit to 7.6 percent of the GDP this year and to 6.5 percent in 2020.

The meeting at the presidential palace is to discuss measures to be taken in the near future and as part of the 2020 draft budget.

President Michel Aoun said in a speech at the opening of the one-day session that everyone should make "sacrifices" in order to get one of the world's most indebted countries out of its problems.

"We have to unite our efforts to come out with solutions to the economic crisis that is strangling the dreams and hopes of our people," Aoun said.

No official details about the expected measures have been made public but economists who took part in preparatory talks for Monday's meeting said they included raising tax on gasoline, boosting the value added tax from 11 to 15 percent on luxury items, as well as fighting tax evasion.

The meeting came 10 days after international ratings agency Fitch downgraded Lebanon's ratings and as tensions on the border with Israel increased in recent days. Hezbollah on Sunday fired a barrage of anti-tank missiles in retaliation for an airstrike that targeted the group in Syria and an alleged Israeli drone attack south of Beirut late last month.

The recent developments have led for the first time in years for the US dollar to reach 1,560 Lebanese pounds on the black market, compared with the 1,500 that has been fixed since 1997.

Corruption-plagued Lebanon suffers from one of the world's highest debt ratios, high unemployment and little growth.

In July, Lebanon's parliament ratified a controversial austerity budget that aims to save the indebted economy.

Last month, Standard & Poor's Global Ratings maintained its long- and short-term foreign and local currency sovereign credit ratings, saying the country's outlook remains negative.

In January, Moody's downgraded Lebanon's issuer ratings to Caa1 from B3 while changing the outlook to stable from negative.

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