The budget deficit for the first 11 months of the year fell to 48.6 per cent of expenditure, compared with 51.4 per cent in the same period in 2000. The government reined in spending by some $658 million, although this was offset by a $170 million drop in revenues for the 11-month period.
Lebanon has high hopes of the trend continuing. The ambitious budget for 2002 projects a deficit of 40 per cent, compared with the 51 per cent target for this year. While figures for the first 11 months of 2001 show restraint in spending, anticipated revenues from the sale of local GSM operating licences have yet to materialise, and it remains to be seen whether receipts from value-added tax, which will be introduced in February, will enable the government to meet its budgetary targets for 2002.
Debt servicing is the largest drain on government expenditure, at $2,130 million in the first 11 months. Public debt now stands at about $27,000 million, representing more than 165 per cent of Lebanon's gross domestic product. The IMF has warned that devaluation may be one of the few solutions left for relieving the country's mounting fiscal difficulties.
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