Lebanon : Public Expenditure Review, Reform Priorities for Fiscal Adjustment, Growth and Poverty Alleviation

Abstract

Lebanon's current priority -- in the face of high public deficits and unsustainable debt dynamics -- is to contain and rationalize public expenditures in every possible sector while improving the efficiency of social spending. The needed containment of primary public expenditures should be understood as a transition to restore fiscal sustainability and enhance growth prospects. This Public Expenditure Review aims to assist Lebanon in its fiscal stabilization effort. The containment of public expenditures could entail painful choices, which will first require an analysis to identify where spending pressures lie (e.g., contingent liabilities, social sectors), and how to address them. And ideally, eliminating non productive spending should replace containment as the main instrument of adjustment. The report seeks to identify what critical and realistic short and longer term measures can be implemented to achieve this objective. The report is organized as follows. Chapter 1 provides the macro-economic framework and discusses the need for fiscal adjustment. Chapter 2 looks for possibilities to contain primary expenditures in the next five years. Chapter 3 reviews the efficiency for current social expenditures, and explores ways to improve their efficiency with the view to improving support for human development during the ordinary course o f the economy and preventing human capital deterioration during any possible economic crisis. Finally, Chapter 4 discusses options to improve civil service and move towards performance budgeting in the medium-to-long run.