Draft 2009 budget approved, projected deficit at 9.4% of GDP

BEIRUT – The Council of Ministers approved the draft budget proposal for 2009 after political obstacles delayed extensively its approval. The draft budget forecast a deficit of 28.4% of total expenditures, equivalent to 9.4% of GDP, compared to an expected a deficit of 27% in the 2008 budget proposal and a realized deficit of 29.3% of total expenditures last year, Byblos Bank weekly statement reported on Sunday.

The increase in expenditures is attributed to the rise in debt servicing, as well as to the $915m needed to finance the public-sector salary increase, and to the $22m earmarked for the parliamentary elections. In parallel, the budget projects the gross public debt to increase by $3bn to $50bn at end-2009 if the privatization of the mobile phone licenses does not take place this year. The 2009 draft budget proposal is based on a real GDP growth of 3% in 2009, on an expected inflation rate of 5% and on an average crude oil price of $54 per barrel.