BEIRUT: The 2011 draft budget, which was submitted by Lebanese Finance Minister Raya Haffar Hassan on Wednesday, projects total deficit in spending next year to reach LL5.411 trillion ($3.6 billion) compared to LL6.658 trillion in 2010, a drop of 18.73 percent or LL1.247 trillion.

The new budget, which has yet to be approved by the Cabinet and Parliament, does not call for higher taxes or value-added tax (VAT) but the minister stressed that she was working on a more acceptable and fair tax system, a clear reference to the comprehensive tax.

The draft budget for 2011 –  LL19.773 trillion – compares to  LL19.538 trillion in 2010, an increase of 1.2 percent only.

Total projected government revenues in 2011 are set at LL14.361 trillion compared to LL12.880 trillion in 2010, an increase of 11.5 percent.

“This budget will see spending on infrastructure increase by LL104 billion compared to 2010 and all the money allocated for investment last year will hopefully be used this year.

“Higher government spending on infrastructure will boost the economic growth in Lebanon,” Hassan told reporters during a news conference at the Finance Ministry.

The 2010 draft budget is expected to be discussed and approved by Parliament at the end of this year following heated debate over every item in the budget between Hassan and Telecom Minister Charbel Nahhas in Cabinet.

The 2010 budget has seen spending rise by little more than $1.1 billion due to the increase in the budgets of the Energy and Water Ministry as well as the of Public Works and Transport Ministry.

Hassan said that the budget had allocated sufficient money to build a power plant with a 700 MW capacity, adding that this plant would run on natural gas which is much cheaper than fuel oil or gas oil.

Energy and Water Minister Jebran Bassil submitted a bold plan to rehabilitate the troubled electricity sector at a cost of $5 billion.

According to the new plan, electricity production will rise to 4,000 MW, up from the current 1,500 MW, within four years’ time.

“It is the first time in many years the Finance Ministry was able to send the budget to the Cabinet one week before the constitutional deadline. This by itself is a great achievement,” Hassan said proudly.

She hopes that the new budget will be sent to the Parliament in October at the latest, once the Cabinet endorses it.

Lebanon has been without an approved budget since 2005, following the withdrawal of some opposition ministers in 2006 and the political standoff between March 8 and March 14 political groups.

She added that according to the Central Bank, the nominal gross domestic product (GDP) in Lebanon is expected to reach 6 percent in 2011.

Central Bank Governor Riad Salameh said that the balance of payments achieved a surplus of more than $1 billion, while gross foreign-currency reserves have reached $30 billion.

The finance minister added that all these new figures would boost the confidence of investors in Lebanon.

Hassan emphasized that growth was not confined to one area but spread across construction, financial services, tourism and trade.

She noted that the size of debt servicing, considered the biggest government spending item, has fallen this year.

According to the new projections of the budget, inflation will reach 2.8 percent in 2011, 2.2 percent in 2012 and 2.2 percent in 2013.

Lebanon’s GDP is expected to reach $40.081 billion in 2011, $42.722 billion in 2012 and $45.538 billion in 2013.

She expected the cost of debt servicing in 2011 to decline to 32.2 percent of Lebanon’s GDP and to 29.8 percent in 2013.

She added that the budget deficit in 2011 will reach 27.37 percent compared 34.08 percent in 2010.

Total public debt in 2011 is expected to reach LL83.045, trillion or 129.24 percent of the GDP, LL88.246 trillion in 2012, or 129.21 percent of the GDP, and LL91.706 trillion, or 126.33 percent in 2013.