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Lebanon budget deficit ‘much bigger’ than expected: FM

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BEIRUT: Lebanon’s 2019 budget deficit will be much bigger than expected after a sharp drop in state revenues, caretaker Finance Minister Ali Hassan Khalil said on Wednesday, as the country struggles with its worst financial crisis since the 1975-90 civil war.


Speaking to reporters, Khalil did not say how much wider he expected the deficit to be but that revenues had contracted by about 40 per cent over the last three months as the crisis hit consumption, imports, tax revenues and overall economic growth.


“Our revenues for the last three months of the year have decreased in a very big way as a result of the situation we are living with... we have numbers that are honestly very worrying,” he added.


Lebanon approved a 2019 budget last May that projected a deficit of 7.6 per cent of gross domestic product based on a growth forecast of 1.2 per cent.


A liquidity crunch has already led banks to enforce capital controls and the Lebanese pound to slump by one third.


Khalil said public salaries were a priority and would be paid this month and in coming months, but that “doesn’t deny that we are faced with real difficulties in financing the state as a whole”.


Six weeks since Saad al Hariri resigned as prime minister amid protests against the ruling elite, Lebanon needs to form a new government to enact urgent reforms it hopes will net support from foreign donors.


Meanwhile, the UN-created International Support Group (ISG) for Lebanon meets in Paris on Wednesday, stressing the need for a stable government that listens to public opinion expressed in an ongoing popular uprising, organisers said.


France and the UN were to co-host the meeting, which the French foreign ministry said “should allow the international community to call for the rapid formation of a credible and efficient government to take the decisions necessary to restore the economic situation”.


And it urged the authorities to “respond to the aspirations expressed by the Lebanese” people.


The aim of the gathering would be to identify the conditions and reforms required from the government “so that the international community can accompany Lebanon” on its recovery, the foreign ministry said. — AFP


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