Khalil: Structural Problems Can't be Resolved in One State Budget

Finance Minister Ali Hassan Khalil on Tuesday noted that one state budget is not sufficient to resolve the state's “structural problems.”

“There are structural problems in the state institutions that cannot be resolved in a draft state budget, specifically regarding the role of the public sector,” Khalil said in an interview with the Progressive Socialist Party's al-Anbaa news portal.

“The debate has started regarding the role of public employees and the restructuring of the entire administrative hierarchy,” Khalil added.

The government on Monday approved a long-awaited austerity budget aimed at rescuing an economy crumbling under massive debt and unlocking billions in international aid.

"We are ahead of an extraordinary transformation that is... essential to cut spending and boost earnings," Khalil told reporters after a cabinet session at the presidential palace.  

Sealing weeks of acrimonious budget talks, Khalil said the cabinet approved a budget expected to trim Lebanon's deficit to 7.59 percent of gross domestic product -- 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 19,6000 billion pounds in government earnings, he said. 

Debt servicing and public sector salaries and benefits each will make up 35 percent of the budget, while government subsidies to the state-owned electricity company will constitute 11 percent, he added. 

"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.

The small Mediterranean country 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 ailing economy.