Lebanon’s government to approve 2019 budget, including controversial spending cuts
After more than 15 cabinet meetings in the last month alone, Lebanon’s government is expected to finalise the details of its 2019 budget today.
Lebanon’s economy is in dire straits and has been for some time. Growth is expected to clock just 1.3% this year; unemployment is on the rise, particularly among the youth where one in five cannot find work; and Lebanon’s debt is expected reach 160% of GDP this year—the second highest level in the world.
The stakes around the budget are high. Some $10 billion has been pledged to Lebanon by international donors on the condition that Beirut demonstrates its commitment to cutting the budget deficit—currently 11%—and addressing corruption. This year’s budget aims to cut the deficit to around 8%. However, the austerity measures necessary to achieve that cut—including delaying retirement for soldiers, scaling back public employee benefits and lowering social benefits—will be extremely unpopular.
Indeed, anti-austerity protests emerged in Beirut this week. The government could soften public backlash by cutting their own wages, but this is predictably unpopular with some lawmakers and appears unlikely. As such, expect potentially violent protests in the coming weeks, further roiling investor confidence and exacerbating Lebanon’s long-standing economic woes.
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