Proposed deficit is at 5.7 percent of GDP
The Ministry of Finance (MoF) has submitted the draft law of the 2020 budget to the Cabinet with a projected deficit of LL5,090 billion ($3.4 billion). It is expected to be discussed over several sessions and after a vote is sent to Parliament sometime during October.
The deficit figure does not include Treasury transfers to Electricité du Liban (EDL), which are set at LL1,500 billion ($1 billion).
The deficit-to-GDP ratio is estimated at 5.7 percent compared with 7.6 percent in the 2019 budget law that was approved by the Parliament. If transfers to EDL are added to the deficit, the 2020 deficit-to-GDP ratio becomes 7.4 percent.
The 2020 deficit is $509 million more than that of 2019. The projected real economic growth of 1.2 percent in 2020 made the deficit-to-GDP ratio for 2020 lower than that of 2019. The MoF anticipates a GDP of $59.2 billion for next year. It has projected an inflation rate of 2.8 percent.
The MoF said the draft law includes budget cuts of more than $1.7 billion. The expenditure items set to witness significant increases in 2020 are interest expenses as well as retirement pensions and compensation following lay-offs. Interest expenses on Treasury bills, Eurobonds, and loans will rise by $585 million. Overall debt service is expected to reach $6.1 billion in 2020. Retirement pensions and lay-off compensation will increase by $201 million.
Reported by Shikrallah Nakhoul
Source : Businessnews