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| The Beirut corniche: more twists and turns to come before Lebanon's budget is sorted out |
Hopes that fiscal consolidation would begin paying off for Lebanon in 2004 were dashed by the draft budget approved by the cabinet in late October.
After more than a month of political infighting, the 30-member cabinet led by prime minister Rafiq Hariri approved a budget package that forecasts an increased deficit of 32% on budget expenditures. An earlier forecast was for a 2004 deficit of between 27% and 30.8%, and the new figure also greatly exceeds the now overly optimistic 24.7% deficit forecast for 2003. The budget will see gross debt creep back to the level recorded before the Paris II lending conference of November 2002, where European and Arab donors offered $4.4 billion in soft loans to allow the government breathing space in which to institute reform.
For a country with a public debt of around $32 billion - over 180% of GDP - the budget has been roundly dismissed by market observers as disappointing. No privatization or securitization receipts are part of the package for the coming year.