BEIRUT, (Reuters) - Lebanon's parliament on Tuesday, May 29, began debating the 2001 budget projecting a deficit of 51 percent of spending as concerns grow about the country's ability to handle its public debt.
Lebanon's public debt reached $24.03 billion at the end of March, about 150 percent of GDP, the highest level of central government budget deficit of any sovereign rated by major agencies.
A parliamentary source said debt servicing accounted for 4,300 billion pounds ($2.85 billion) in the draft budget.
The country's first quarter budget deficit narrowed to 37 percent of spending compared to 53 percent in the January-April of 2000, but bankers said that did not indicate tighter fiscal policy, since significant spending is on hold while the budget awaits approval.
The projected 2001 deficit as a percentage of spending would be a reduction from a deficit of 56 percent of spending in 2000.
Standard and Poor's this week cut Lebanon's long-term local currency issuer credit rating from BB- to B+, and revised its ratings outlook to negative on three Lebanese banks.
Local banks are the main source of government financing through their purchases of treasury bills.
Lebanon's pound has been near the upper limit of the central bank's intervention band of 1,501-1,514 pounds to the dollar for months, and traders say the central bank has been the principal or only seller of dollars for most of that time.
The country's debt burden comes at a time when Lebanon is attempting to recover from the effects of its 1975-1990 civil war.
An attempt to stimulate the economy through redeveloping Beirut's central district has bogged down due to concerns about regional stability, the public debt and high property prices.
© 2001 Mena Report (www.menareport.com)