Beirut: Lebanon's Finance Minister Raya Haffar Al Hassan sent a draft 2010 budget to the cabinet today, calling for a 16 per cent increase in expenditure and a wider deficit than last year.
Fiscal spending will rise to 20.29 trillion Lebanese pounds (Dh49.5 billion), while revenue increases 8.6 per cent to 13.8 trillion, according to the proposals. The subsequent deficit is equivalent to 10.7 per cent of gross domestic product, compared with about 8.6 per cent last year.
"It's very disappointing that the political class did not get its act together and work to reduce spending as the problem is not on the revenue side, it's related to spending," said Nassib Ghobril, head of research at Byblos Bank.
Once supported by the cabinet, the proposals will be sent to parliament for discussion. If approved, it would become the first ratified budget since 2005 because of political disagreements, a month-long war with Israel and internal civil strife.
Increased taxes
The proposals call for an increase in taxes on interest earned on bank deposits to 7 per cent from 5 per cent. They also raise real estate registration fees for transactions worth more than 750 million pounds to 7 per cent from 5 per cent.
"This is the highest deficit on record both in nominal terms and as a percentage of GDP," Ghobril added. "The structural problems remain and have not been addressed." The government needs to restructure the electricity industry and sell telecommunications assets, he said.
The government spent $1.5 billion (Dh5.5 billion) on subsidies to the state-owned power company, Electricite du Liban, last year. Plans to sell two state-owned mobile phone operators, which previous governments had hoped would raise as much as $7 billion, were put on hold because of an 18-month political crisis that eased in May 2008 and later by the global credit crisis and parliamentary elections in June of last year.
