Lebanon hopes to slash its public deficit to less than 4 per cent of GDP over the next five years, a top adviser said Friday, as part of measures to unlock key aid.
The country — one of the most indebted in the world — last year notched up a deficit of 11.5 per cent of the GDP, the World Bank says.
The Lebanese cabinet on Monday approved an austerity budget to access billions of dollars in aid to boost the country’s ailing economy.
The plan, reached after weeks of talks and still to be ratified by parliament, aims to reduce Lebanon’s deficit to 7.59 per cent by the end of the current year.
But Nadim Mounla, who advises Lebanese premier Saad Hariri, on Friday said the country hoped to further cut that deficit by the end of 2023.
“The objective is to hit between 3.5 and 4 per cent by 2023,” he told journalists.
Donors at the so-called CEDRE conference last year in Paris pledged $11 billion in aid and soft loans to Lebanon, which has promised to reduce its public spending including on electricity.
The state power company receives one of the largest slices of the government’s budget after debt servicing and salaries.
“In 2020 we’re expecting a further decline in the deficit coming from power sector,” Mounla said.
The government hopes to reduce spending on electricity subsidies by half by next year, he said.
The adviser said donors have earmarked more than $1 billion of CEDRE commitments that are “in the pipeline”, without providing further details.
Growth in Lebanon has plummeted in the wake of repeated political deadlocks in recent years, compounded by the 2011 breakout of civil war in neighbouring Syria.
The country has been racking up public debt since the end of its own 1975-1990 civil war, which now stands at more than 150 per cent of GDP, according to the finance ministry.