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Lebanon declares an economic emergency and plans to accelerate reforms
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Economy News - Baghdad
Lebanon will declare an economic emergency and the government has begun work on a plan to accelerate fiscal reforms, the prime minister said.
Prime Minister Saad Hariri added that the policy of maintaining the stability of the Lebanese pound, pegged to the US dollar, will continue.
Hariri said ministers, politicians and lawmakers who met on Monday agreed to outline a plan that would put public finance and the economy on a more sustainable path.
"There is an agreement to declare an economic emergency," Hariri said.
"This difficult economic situation, we as a government must take swift action, such as the budget issue, to save it in time and how to reduce the budget deficit," he told reporters after the meeting, which President Michel Aoun also attended to address a deteriorating economic situation.
He said the government will hold more meetings to speed up the work.
Lebanon is under one of the heaviest public debt burdens in the world at 150 percent of GDP and has been suffering for years with low economic growth.
Government finances, tainted by corruption and waste, are groaning under the pressure of a bloated public sector, debt servicing costs and subsidies for the state's electricity producer.
Hariri said the proposed measures include not going out of this year's budget, which includes politically difficult steps such as freezing government appointments, cutting out units that weigh on the public treasury and putting state-owned companies under public offering.
He said the government aimed to prevent the budget deficit from exceeding 5 percent of GDP by the end of a three-year fiscal plan ending in 2022.
Hariri avoided answering a question about the possibility of raising taxes, saying any steps the government was considering to boost revenues would take into account the non-increase of the burden.
He said the reforms would provide about $ 11 billion pledged by donors at last year's Paris conference to finance investment.
He said accelerating reforms would prevent a crisis similar to that in Greece, which was in debt crisis nine years ago and had to adopt austerity measures under close supervision of foreign creditors.
"If we want to take measures, we take them in order to save the country," the Lebanese prime minister said.
Hariri said Fitch's downgrade of Lebanon's credit rating to CCC 10 days ago was a warning to take measures to boost investor confidence before it is too late.
Fitch attributed the downgrade from B- to "mounting pressures on Lebanon's funding model and growing risks regarding the government's ability to service debt."
Lebanese leaders are warning of a financial crisis unless changes are made. The impetus for reforms has grown amid slowing deposits in the Lebanese banking sector, a vital source of state funding.
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