Lebanon's government on Monday (May 27th) approved a long-awaited austerity budget aimed at rescuing an economy crumbling under massive debt and unlocking billions in international aid, AFP reported.
"We are ahead of an extraordinary transformation that is... essential to cut spending and boost earnings," Finance Minister Ali Hasan Khalil said after a cabinet session.
Sealing weeks of acrimonious budget talks, Khalil said the cabinet approved a budget expected to trim Lebanon's deficit to 7.59% of gross domestic product (GDP) -- a nearly 4-point drop from the previous year.
This will be achieved by limiting spending to 25,840 billion Lebanese pounds ($17.1 billion) and accruing a total of 19,600 billion pounds ($13 billion) in government earnings, he said.
Debt servicing and public sector salaries and benefits each will make up 35% of the budget, while government subsidies to the state-owned electricity company will constitute 11%, he said.
"Today we are sending a clear message to the international community and all donors committed to supporting Lebanon that we are serious" about economic reform, Khalil said.
Lebanon has promised donors to slash public spending as part of reforms to unlock $11 billion in aid pledged at a conference in Paris last year.
Khalil said the new budget would boost donor confidence and translate into development and infrastructure projects to help revive Lebanon's economy.
He did not detail austerity measures included in the budget, but they are expected to include a temporary hiring freeze in the public sector, a reduction of public sector benefits and pensions, and tax hikes.
The draft budget still needs to be approved by parliament.
House speaker Nabih Berri has said it could take up to a month for parliament to pass it, according to comments published earlier Monday.
