BEIRUT Lebanon's Finance Minister Georges Corm said on Friday he expected the budget deficit to end 2000 at between 44 and 46 percent of spending but sees more revenues in 2001 to lower the figure to 35.7%.
Corm told a news conference the 2000 deficit forecast above the government's 37.3% target was mainly caused by stronger oil prices and higher municipal spending.
Lebanon imports crude, which has scaled to 10-year highs this month.
But he said he hoped that the government would be able to generate more revenues in 2001 which would narrow the chronic gap in Lebanon's budget. Privatization and introducing value-added tax were among Corm's proposals.
The Finance Ministry will present to the cabinet on Friday its draft budget which sees spending in 2001 at 9,000 billion Lebanese pounds ($5,970 million) and revenues at 5,780 billion pounds, with a deficit equivalent to 35.7% of spending.
"Today I will send the draft budget to the cabinet and then the cabinet would send it to the Parliament. The new government could withdraw this budget and amend if it wanted to," he said.
Lebanon will appoint a new government after October 17, when its newly-elected Parliament sits. The strongest candidate for the premiership is former prime minister Rafik al-Hariri.
"We have hope that by next year there would be some progress in the cellular phone issue and also reducing the shares of revenue given to the municipalities," said Corm.
Lebanon is demanding the two cell phone operators in the country to pay millions of dollar in fines, alleging that among other things they have exceeded their subscriber limits.
"The deficit could even drop further if some Persian Gulf countries wished to help Lebanon and buy, on commercial bases, part of the domestic debt and transfer it into a foreign debt." Lebanon's debt and deficit burdens are a legacy of Hariri's efforts to rebuild after the devastating 1975-90 civil war. He borrowed heavily locally and from abroad to kick start the economy, which boomed in the early 1990s and then practically stalled in the last two years.
Lebanon Braves International Debt Market Lebanon's crippling $21 billion debt is equivalent to about 145 percent of gross domestic product one of the highest ratios in the world.
In the first half of this year, servicing the debt exceeded government revenues, a situation financiers said was untenable.
The economy is also in recession, with the Central Bank forecasting no growth this year. This week, rating agency standard and poor's cut Lebanon's long-term foreign currency issuer and senior unsecured debt ratings to B+ from BB-.
Despite the bleak picture, Lebanon braved the international credit markets on Thursday and issued a $450 million Eurobond.
Corm, who invited reporters for a briefing about the bond, said Lebanese banks were as usual the biggest buyers.
"Around 80 percent of the issue was purchased by Lebanese banks, 15 percent by European investors and five percent by Persian Gulf investors who usually buy Lebanese bonds," he explained.
Corm said the S&P downgrade had a limited effect on the issue.
"Some investors who normally buy Lebanese papers could not do so due to their regulators demand a certain rating." But the finance minister did not rule out the possibility of tapping the debt market again this year. High interest rates of up to 14 percent on local treasury bills means it is cheaper for Lebanon to borrow from abroad.
"We are authorized to borrow up to $1.5 billion this year and so far we have borrowed $800 million. We could go again to the market and that depends on situation of the market and our policies as well," he added.
Lebanon in 1999 issued several bonds worth $1.2 billion.
(Reuter)