http://www.metimes.com/2K1/issue2001-44/bus/lebanese_deficit_plan.htm
Lebanese deficit plan fails

Lebanese Prime Minister Rafik Hariri's plans to rescue the country from its crippling deficit received a serious blow when the International Monetary Fund warned that the government's much-touted privatization drive and soon-to-be implemented value-added tax simply weren't enough.

The final draft of the report, prepared by an IMF team assigned to
Lebanon, regretted "the lack of a more up-front adjustment
effort. We urge the authorities to consider an immediate
tightening of fiscal policy."

According to the Central Bank, the public debt reached $25.9
billion at the end of August 2001. The IMF projected the 2001
budget to be "roughly the same as 2000" – which ended at more
than 56 percent of GDP. The government, however, projected the
deficit at the end of the year to be approximately 50.8 percent.
More than $500 million in VAT is expected to be
generated each year. Some economists, however, have warned
that such revenues are completely unrealistic as long as the
country continues to slide into recession.

Finance Minister Fouad Siniora has fiercely defended VAT,
stressing that it is vital to reduce debt servicing.

Under pressure from both the IMF and the World Bank, the
government has been seeking new ways to boost the confidence of
international markets in the country.

some bankers feel that the
government may not be able to borrow more money because the
debt servicing will exceed the entire revenues of the state.

The IMF did, however, praise the banking sector, which was able
to sustain good profits despite the recession.