$60 billion debt mars budget plans

Minister of Finance warns against growing public debt, debt servicing costs

The Minister of Finance Mohamad Safadi warned on Thursday (February 23) that public debt this year will exceed $60 billion. He said that such a massive debt will cost $3.6 billion per year in debt servicing.

Safadi indicated that the yearly treasury revenues amount to $9.5 billion, of which $6 billion are spent on salaries. He said that a significant amount is also spent on power production. He therefore estimated the budget deficit to hover at around $1.4 billion even before any new investments are made.

According to Safadi, raising wages for public sector employees should be met with increased working hours as well as boosted productivity levels.

Safadi said that the government could save up to $1 billion in debt servicing costs if it sells its sovereign bonds to the international market where lending rates are much lower than those in Lebanon.

Safadi said that the ministry plans to submit a new budget draft which takes into consideration all the recent developments, including the wage raise and the new tax cuts.

The Parliament passed a bill (on February 23) scrapping the ten percent VAT on red and green gas oil. The president of the parliament’s Finance and Budget Committee, MP Ibrahim Kanaan, had warned that crossing out the tax on gas oil will cut more than $26 million of the government’s annual revenues.