Lebanon unveiled a plan to bring its public finances under control in May but faces challenges to restore investors’ confidence that is needed to stave off the economic crisis.
Sunday 09, June 2019 BY KUDAKWASHE MUZORIWA
Moody's said that Lebanon's 2019 draft budget plan to tackle its pressing fiscal situation through spending cuts, revenue increases and refinancing of T-bills will likely fail to deliver a significant shift in the country's debt trajectory, reported Reuters.
The budget, which awaits approval from the parliament, aims to cut the fiscal deficit to 7.6 per cent of GDP from 11.5 per cent in 2018 and implies the primary balance will turn into a surplus of 1.7 per cent from a deficit of around one per cent of GDP.
Elisa Parisi-Capone, Moody's Analyst, said that this adjustment is achieved primarily via spending cuts and a limited increase in revenue.
Moody’s stated that according to its debt projections, the implied primary balance adjustment and the previously announced interest savings from the refinancing of high interest-rate T-bills with lower participation of the central bank and commercial banks, remain insufficient to significantly change the debt trajectory because of the persistent interest rate - growth rate differential.