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Monday, 26 August, 2002, 15:10 GMT 16:10 UK
Lebanon outlines stringent budget
Lebanese fishermen
Increased taxes and wage cuts may come as a shock
The Lebanese Finance Ministry has drafted a stringent new budget to help tackle the country's debt burden.

The 2003 budget proposes cutting spending by 10% and increasing revenue by 16%.

"This budget is the beginning of the way out of the debt crunch," said prime minister Rafik al-Hariri

The massive public debt burden of $29bn (19bn) has been eating up most of the government's cash and choking economic growth.

The cost of rebuilding the country after the 1975-1990 civil war has put severe strain on public finances.

Lebanon's public debt has now ballooned to about 170% of its gross domestic product.

Wage cuts

Local press have quoted finance minister Fouad Siniora as saying the proposed budget will be a "positive shock".

The spending cuts will primarily come in the form of a reduction in public administration, salaries and wages.

Meanwhile, the finance ministry is counting on value-added-tax (VAT) - introduced in February - to substantially boost its coffers.

The government is also pressing ahead with controversial sales of its state electricity and mobile phone firms in order to raise cash.

The cabinet will hold extraordinary meetings on Tuesday and Wednesday to approve the budget, before sending it to Parliament for ratification.

Mr Siniora said he was hoping to achieve economic growth of 2.5% in 2002 and inflation of 4.5%.

See also:

20 May 02 | Country profiles
29 Jul 02 | Business
17 Jun 02 | Business
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