Lebanon’s budget deficit up 4% in 2010

Lebanon’s budget deficit widened 4 percent in the first ten months of the year as debt payments increased.

The deficit widened to 3.78 trillion Lebanese pounds ($2.5 billion) from 3.63 trillion pounds in the same period last year, the Ministry of Finance said in an e-mailed report today.

Interest payments on domestic debt rose 8 percent while repayment on foreign debt principal increased 17 percent, the ministry said.

Prime Minister Saad Hariri’s national unity coalition, formed a year ago, has to finance public debt that the government expects to rise to $55.3 billion next year, or about 129 percent of gross domestic product.

Lebanon’s debt-to-GDP ratio has declined from a high of 180 percent at the end of 2006. It accumulated the debt to rebuild the country after a 15-year civil war that ended in 1990 and the conflict with Israel in 2006.

The government spent 418.6 billion pounds less in the first ten months of the year on subsidies for Electricite du Liban, which provides more than 90 percent of the country’s electricity, the ministry said.

Lebanon had a budget deficit of 4.46 trillion pounds last year and a 4.4 trillion-pound shortfall in 2008, averaging about 9.7 percent of gross domestic product. Bloomberg