Total spending in the draft budget, excluding debt servicing, is forecast at $3,410 million, compared with $3,066 million in 2003, while total revenues are projected at $4,266 million, compared with $3,666 million this year. The draft budget projects a deficit of 32 per cent of expenditure: this year’s deficit is expected to reach more than 35 per cent of expenditure, up on the budgeted 25 per cent.

Banque du Liban (central bank) governor Riad Salameh, who was critical of the draft budget, warned in early November that the public debt could reach $35,000 million at the end of 2004 if the government failed to carry out reforms.

Under pressure from the World Bank and IMF, the government of Prime Minister Rafiq Hariri is desperately trying to implement its privatisation and securitisation programme to reduce the $32,000 million public debt. However, the sharp differences between Hariri and President Lahoud over reforms have dashed hopes of a quick sell-off of the cellular licences this year.

The Higher Privatisation Council launched the auction and tender for the cellular networks at the beginning of October, with prequalifiers being given 60 days to submit their offers. Telecommunications Minister Jean Louis Qordahi has said that the cabinet plans to review all the bids in December. However, a source close to Qordahi said that the government will not accept any offer below $1,600 million for each licence, even though some local analysts believe the government will be fortunate to get more than $1,000 million for each.