The IMF has called on Lebanon to halt the rise in public debt by increasing tax compliance, lifting fuel taxation and rebalancing spending, including reducing costly electricity transfers.

The statement was made following the visit of an IMF delegation to the country. The fund commended the political progress made in recent months, including the ratification of a new electoral law that paves the way for the first parliamentary elections in eight years to be held in May 2018.

But it said the wide budget deficit remains a source of vulnerability and has led to public debt climbing to 148 per cent of GDP in 2016.

Lebanon in late August passed public sector pay increases, which will further inflate expenditure. Revenue-raising measures designed to offset the impact that were approved at same time were suspended just days later. The proposed increases to VAT and corporation tax had provoked protests earlier in the year.

The IMF said passing a budget - the first in more than a decade - with clear fiscal adjustment measures would send a strong signal of commitment to reduce public debt and boost confidence in the country’s economy.

The IMF expects growth to remain subdued in 2017 at around 2 per cent.