​Gulf support likely if Lebanon's budget mollifies other donors

GULF COUNTRIES - Report 22 Oct 2019 by Rory Fyfe and Justin Alexander

The cabinet approval of an ambitious 2020 budget is an important step but it still needs parliamentary approval and many details remain unclear, particularly on cutting interest on local debt. Its proposal to cut the deficit by 10 percentage to -0.6% of GDP is unrealistic but even going half this way would be a significant signal to donors and the market. If Harari had resigned yesterday, Gulf support would have been unlikely. Providing he stays, it could come in November, if other donors respond favourably to the budget and provided there are no more political wild cards. Historically, the GCC (mainly Saudi, Kuwait and related multilateral) have provided about half of the donor support to Lebanon. Gulf remittances, tourism and trade are even more vital to Lebanon’s economy.

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