Lebanon’s parliament passes 2019 austerity budget

The new budget is expected bring new taxes and cuts in public spending.

Saad Hariri in Paris Nov. 2018.
Lebanon's Prime Minister Saad al-Hariri said on Friday that his coalition government passed a state budget for 2019 [Thomas Samson/Pool via Reuters]

The parliament of Lebanon approved a 2019 austerity budget on Friday in an attempt to rescue an economy that is crumbling under massive debt and unlock billions of dollars in international aid, state media reported.

The vote came nearly two months after the cabinet approved the budget, which is expected to trim Lebanon’s deficit to 7.59 percent of gross domestic product (GDP) – a nearly four-point drop from the previous year.

The deficit was 11.2 percent of GDP in 2018.

Lebanon is one of the world’s most indebted countries, with public debt estimated at 141 percent of GDP in 2018, according to credit ratings agency Moody’s.

The state-run National News Agency said “parliament passed the 2019 budget”, but gave no further details. Officials were not immediately available to comment on the vote.

Before the vote, dozens of retired military and security personnel demonstrated outside parliament to denounce a decision to reduce their pensions as part of the austerity package.

Army veterans will face new taxes on their pensions as a result of budget cuts, Defence Minister Elias Bou Saab said on Friday.

Protesters clashed with security forces as they tried to breach a barbed-wire barricade erected outside Parliament.

They criticised officials for targeting public-sector pensions as part of the austerity package, while failing to enact more meaningful reforms, such as battling rampant corruption.

Friday’s vote also capped days of heated parliamentary debates that addressed proposed budget cuts and were broadcasted on live television.

According to NNA, 18 legislators voted against the 2019 budget, while 83 voted in favour.

Growth in Lebanon has plummeted in the wake of political deadlocks in recent years, compounded by the 2011 breakout of civil war in neighbouring Syria.

The country has been racking up public debt since the end of its own 1975-1990 civil war. That debt now stands at more than 150 percent of GDP, according to the finance ministry.

The small Mediterranean country has promised donors to slash public spending as part of reforms to unlock $11bn in aid pledged at a conference in Paris last year.

Source: Reuters