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Sun 26 May 2019 07:55 AM

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Lebanon cabinet reaches consensus on 2019 budget: minister

Budget set to include spending cuts, reduction in public sector benefits and pensions, and the introduction of series of tax hikes

Lebanon cabinet reaches consensus on 2019 budget: minister
Prime Minister Saad Hariri last month vowed to introduce "the most austere budget in Lebanon's history" to meet commitments made to international donors.

Lebanon's cabinet has agreed on a draft 2019 budget, capping weeks of acrimonious talks over the measures needed to rescue an economy crumbling under debt, Information Minister Jamal Jarrah said.

The long-awaited budget has yet to be officially announced, he explained, saying that would happen "at a later stage" following a final meeting at the presidential palace in Baabda.

"We have finished discussing and approving all the articles and figures included in the 2019 budget," Jarrah told reporters after a cabinet session.

He said that spending cuts introduced in the budget would reduce Lebanon's deficit to 7.5 percent of gross domestic product - a 4 point drop from 2018.

The World Bank estimates the public deficit reached 11.5 percent of GDP for 2018, a spike compared to previous years.

So far, to decrease the public deficit, the cabinet has said it would increase taxes on interest income from bank deposits from seven to 10 percent.

It is also expected to reduce public sector benefits and pensions and introduce a series of tax hikes.

Protests

Fears over the potential cuts have sparked a string of small protests in recent weeks.

Finance Minister Ali Hasan Khalil confirmed a consensus had been reached.

"We did not hear any reservations," he said in a televised interview after Friday's session.

"Everyone agreed on the budget."

The small Mediterranean country has promised donors it would slash public spending as part of reforms to unlock $11 billion in aid pledged at a conference in Paris last year.

Prime Minister Saad Hariri last month vowed to introduce "the most austere budget in Lebanon's history" to meet commitments made to international donors.

Growth in Lebanon has plummeted in the wake of endless 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 1975-1990 civil war, which now stands at 152 percent of gross domestic product (GDP), according to the finance ministry.

Eighty percent of that debt is owed to Lebanon's central bank and local banks.

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