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Lebanon Draft 2020 Budget Deficit Lower than 2019's, Says Finance Minister

Lebanon Draft 2020 Budget Deficit Lower than 2019's, Says Finance Minister

Wednesday, 11 September, 2019 - 17:45
Lebanese Finance Minister Ali Hassan Khalil. (Reuters)

Lebanon's draft 2020 budget, which was passed to the government for discussion on Wednesday, contains a lower deficit projection than in the 2019 budget, Finance Minister Ali Hassan Khalil told Reuters.

"Although the cost of servicing the public debt has increased, we were able to preserve a reduced deficit to GDP ratio ... despite the rise in public debt and the lowering of growth to around zero," he said.

Lebanon is under pressure to approve the state's 2020 budget this year to shore up the confidence of investors and international donors who last year pledged $11 billion for infrastructure financing conditional on fiscal and other reforms.

The 2019 budget was only approved halfway through this year and Lebanon, until 2017, had spent 12 years without a budget.

Lebanese Prime Minister Saad al-Hariri last week said his government would aim to cut the budget deficit to 7% of GDP next year.

With one of the world's highest debt burdens, low growth and crumbling infrastructure, Lebanon's economy is struggling and authorities are seeking to implement reforms to ward off a crisis.

Three weeks ago, Fitch ratings agency downgraded the sovereign to CCC on debt-servicing concerns. At the same time, S&P Global affirmed Lebanon's credit rating at B-/B with a negative outlook, saying it considered Lebanon's foreign exchange reserves sufficient to service government debt in the "near term".

Moody's downgraded Lebanon's rating to Caa1 in January.

The IMF said in July the deficit in 2019 would likely be well above the government's target of 7.6% of national output.

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