Lebanon’s central bank will slash $2.9 billion from the country’s local-currency interest payments and commercial lenders will pay a one-time tax under a government plan to wipe out the budget deficit almost entirely next year, reported Bloomberg.
Mohammad Makiyeh, the Secretary General of the Council of Ministers, said that Lebanese prime minister, finance minister and the central bank governor will see the programme through.
The government will also impose a two per cent tax on banks’ revenue in 2019, which would amount to nearly LBP 600 billion ($397 million), said Adel Afiouni, the Minister of State for Information Technology.
“This will give us fiscal space to have enough time to get our reforms in place, the government will not borrow and is committed to paying maturing debt next year,” added Afiouni.
Additionally, ministers have also agreed to cut their own salaries by half and begin privatising the telecommunications sector.
While the plan to slash debt costs may appease the protesters, many of whom accuse banks of profiting from the nation’s financial trouble, investors will be assessing the implications on Lebanon’s credit.