World Bank: Lebanon reforms on sound path but must not stop

BEIRUT: Lebanon has taken a sound path with reforms in its 2019 draft budget and power sector but it will have to keep going, World Bank MENA vice president Ferid BelHajj said on Friday in Beirut.
The bank and other donors helped arrange pledges of $11 billion in soft loans and aid at a Paris conference last year to build new infrastructure. But the money depends on the Lebanese government launching reforms it has put off for years and tackling its huge debt burden.
“In general ... we are optimistic, but at the same time our optimism is cautious because of the economic situation in the region,” BelHajj was cited as saying in a statement from Lebanese Prime Minister Saad Al-Hariri’s office after the two met.
Parliament is debating the 2019 draft budget approved by the cabinet last month, a critical test of Lebanon’s will to start reforms. Leaders warn of a financial crisis without changes.
The budget aims to cut the deficit to 7.6% of gross domestic product from 11.5% last year. Lebanon has one of the world’s largest public debt burdens at 150% of GDP.
“Lebanon is going down a sound path when it comes to the reforms at the level of the budget and electricity ... but the reforms do not end. They are continuous,” BelHajj also said.
State finances are strained by a bloated public sector, high debt-servicing costs and subsidies for power.
Promised reforms include working to reduce the deficit in the power sector, as well as reducing debt servicing costs, waste and corruption.