Lebanon Opportunities – August 2019

of gross domestic product (GDP) is a ‘red

line’ that we cannot cross.” He said the

most important element of this budget was

that it has set the basic principles for the

reforms that the government will continue

to implement in the 2020 and 2022 budgets.

The deficit-to-GDP ratio realized in 2018

widened to 11.2 percent from 8.6 percent

in the previous year. At the CEDRE donor

conference the government committed to

lowering the fiscal deficit by one percent on

an annual basis over a period of five years.

P

arliament has passed the 2019
austerity budget. The approval of
the budget is likely to boost investor
confidence and trigger a recovery in bank
deposits. The budget included a number
of amendments, such as imposing a three
percent customs duty on imports subject
to valued added tax (VAT). International
financial institutions have urged the
government to implement the required
reforms and execute cost saving measures
in the budget. The International Monetary

Fund (IMF) and the Institute of International

Finance (IIF) expect the real deficit-to-GDP

ratio for 2019 to be higher than the 7.

percent target set by the government.

AUSTERITY BUDGET

The parliamentary Finance and Budget

Committee had projected a total expenditure

of nearly $16.9 billion and regular revenues

of $12.8 billion for the 2019 budget. Prime

Minister Saad Hariri said: “Cutting the

deficit in the 2019 budget to 7.6 percent

Only a first step

BUSINESS AND ECONOMY

COUNTRY REPORT

DEPOSITS LIKELY TO RECOVER AFTER THE BUDGET WAS PASSED

THE GOVERNMENT FACES A CHALLENGING DEFICIT TARGET

DOLLAR PEG NEEDED FOR INVESTOR CONFIDENCE

16 LEBANON OPPORTUNITIES, AUGUST 2019