Lebanon budget deficit grew 9.4% in first 11 months

Lebanon’s budget deficit widened 9.4 percent in the first eleven months of last year as debt payments increased.

The deficit widened to 4.27 trillion Lebanese pounds ($2.8bn) from 3.9 trillion pounds in the same period year earlier, the Ministry of Finance said in an emailed report today.

Interest payments on public debt rose 4 percent in the period while repayment on foreign debt principal increased 15 percent, the ministry said.

Prime Minister Saad Hariri’s national unity coalition has to finance public debt that the government predicts will rise to $55.3bn this year, or about 129 percent of gross domestic product.

Lebanon’s debt-to-GDP ratio has declined from a high of 180 percent at the end of 2006. The debt was accumulated to rebuild the country after a 15-year civil war that ended in 1990 and the conflict with Israel in 2006.

The government spent 459 billion pounds less in the first 11 months of 2010 on subsidies for Electricite du Liban, which provides more than 90 percent of the country’s power, the ministry said.

Lebanon had a budget deficit of about 4.46 trillion pounds in 2009 and a 4.4 trillion-pound shortfall in 2008, averaging about 9.7 percent of gross domestic product.