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More than six months since parliamentary elections, Prime
Minister-designate Saad al-Hariri has hit a wall in his efforts
to form a national unity government as political factions jostle
for positions in a new cabinet.
Politicians have warned there is a risk of economic crisis if a
government is not formed soon.
The minister, Ali Hassan Khalil, said the government had spent
more than it budgeted for this year, to meet the rising costs of
health, electricity, garbage disposal and increased public
sector wages.
But he said Lebanon would continue to meet its obligations.
"Lebanon ... is committed to paying all its debts and debt
servicing. This is something we have become accustomed to in the
past and will continue to do so in the coming period," he said.
Lebanon has the world's third highest debt-to-GDP ratio and a
new government must be in place before Lebanon embarks on major
fiscal reforms. The International Monetary Fund said in June
these reforms are urgently needed to put the debt on a
sustainable footing.
"We are passing through a slightly delicate stage which requires
a higher level of coordination between political
decision-making, the ministry of finance and the central bank,"
Khalil said in a televised speech after meeting President Michel
Aoun.
"We are trying to follow up on the matter as quickly as possible
so as not to affect .. securing the funding needed by the
Lebanese treasury," he added.
The World Bank estimates Lebanon's national debt will stand at
155 percent of gross domestic product by the end of 2018 and
that the rise in current spending will increase the fiscal
deficit to 8.3 percent of GDP in 2018, from 6.6 percent in 2017.
Khalil said Lebanon was facing a "very big challenge" as a
result of internal and external factors and urged the swift
formation of a new government.
"The issue is no longer a general request, nor a matter of
political luxury, but a fundamental structural need so that we
can carry on in the coming period," Khalil said.
(Reporting by Laila Bassam; Writing by Lisa Barrington; Editing
by Gareth Jones and Andrew Heavens)
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