The Ministry of Finance (MOF) has delayed submitting the proposal to the government, and started discussions with main political parties in an attempt to achieve consensus on the planned raise on the Value Added Tax (VAT).

But raising the VAT, which is the main source of revenue for the government, is still rejected by many political parties as well as labor unions. Last week, the General Labor Confederation said it will stage protests against such a decision.

Therefore, the main  question remains: will the government agree on the budget, or will Lebanon keep living without an approved budget for the sixth consecutive year?

MOF officials said that the 2010 budget proposal includes increasing the Value Added Tax (VAT) to 12 percent from ten percent currently, and the tax on bank interest income from five to seven percent to finance additional expenses.

According to analysts, the MOF is counting on those two steps to accelerate pace of the economy which will help maintain a primary surplus in the 2010 budget, decrease the debt to GDP ratio, and maintain a budget deficit of not more than 25 to 30 percent.

The draft budget for 2010 also includes raising expenses to $13.4 billion to finance new investments in the electricity, healthcare, and infrastructure fields, according to MOF officials.It also includes raising capital expenses to $1.5 billion from $564 million last year while revenues are expected to grow to nine billion dollars.