Lebanese Prime Minister Saad al-Hariri said his government would aim to cut the budget deficit to seven per cent of GDP next year as part of reforms to shore up state finances and rein in public debt.
Lebanon also plans to keep the local currency peg to the dollar which was crucial to move ahead with reforms, Hariri told CNBC in an interview.
“So what we are doing is, fixing our debt to GDP, our deficit and the budget to 7.6 per cent this year, we want to go down to 7 per cent next year, or maybe a little bit less,” he said in the interview aired on Wednesday.
The prime minister also said that “keeping the Lebanese pound at 1,500” is the only stable way to proceed with the government’s reforms.
Hariri said his country would not consider an International Monetary Fund (IMF) programme since it would leave market forces to decide the pricing of the country’s currency.
“I think the IMF has certain criteria that we do not, especially when it comes to the Lebanese pound. This is something that we feel extremely sensitive about.”
The IMF said in July the deficit in 2019 would likely be well above the government’s target of 7.6 per cent of national output.
Lebanon has one of the world’s largest public debt burdens at 150 per cent of GDP.
On Monday, Lebanon declared a “state of economic emergency”, with Hariri saying the government would take emergency measures to speed up economic reforms to help overcome a worsening economic crisis.
Fitch downgraded Lebanon’s credit rating to CCC on debt-servicing concerns 10 days ago.