Lebanese workers protest against austerity

14 May 19

Public service workers in Lebanon have launched a series of protests to denounce proposed government austerity measures.

Telecoms, water, electricity and university staff joined the latest demonstrations on Friday against budget plans to cut their wages, pensions and benefits.

On Sunday retired soldiers began picketing the Central Bank building in Beirut in opposition to pension cuts as the government debates a draft budget, Reuters reported.

Last week central bank workers suspended a strike against the budget proposals, which would cut their pay, but left open the possibility of resuming their action.

The protests come as Lebanon’s coalition tries to agree ways to reduce the fiscal deficit – 11.2% of GDP in 2018 – in the heavily indebted country.

The fragile unity government under the new prime minister Saad al-Hariri is seeking to slash the deficit by cutting state expenditure.

Lebanon has experienced weak growth since 2011 and a large influx of refugees from Syria has further strained public finances.

Government spending is dominated by the public-sector wage bill, debt servicing, and the generous subsidies paid to the state energy provider.

Reuters quoted Hariri as saying that failure to pass a “realistic” budget would amount to “a suicide operation” against an economy saddled with one of the world’s largest public debts.

Public debt in Lebanon is equivalent to about 150% of GDP – one of the highest debt-to-GDP ratios in the world – and the Hariri government’s draft proposals seek to cut the budget deficit to below 9%.

Reducing the deficit is seen as a key test of Hariri’s determination to reform the economy and thereby gain access to billions of dollars of international infrastructure financing.

Last year Lebanon won pledges of low-interest loans and aid worth more than $11bn at the CEDRE conference held in Paris to rally international support for an investment programme on condition that the country satisfies tough economic and fiscal terms.

The IMF in July called for the country to improve debt sustainability and implement fiscal reforms to boost growth.

Market analysts have called for reductions in state spending in the order of $2bn alongside efforts to reform tax collection that could generate a further $1bn.

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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