(Bloomberg) -- 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.
Lebanon's prime minister, finance minister and central bank governor will see the program through, the secretary general of the council of ministers, Mohammad Makiyeh, said in a televised news conference on Monday.
Read more: How Lebanon's Unrest Is Both New and More of the Same
The government will also impose a 2% tax on banks' revenue in 2019, which would amount to nearly 600 billion pounds ($397 million), Minister of State for Information Technology Adel Afiouni told Bloomberg after the cabinet's session.
“This will give us fiscal space to have enough time to get our reforms in place,” the minister, who is also a former Credit Suisse banker, said. The government won't borrow and is committed to paying maturing debt next year.
Read more: Lebanon Heads for Showdown as Reform Vows Fail to Quell Revolt
The measures are part of a sweeping and unprecedented attempt by the government to appease protesters who have been demanding its resignation for the past five days. Ministers have also agreed to cut their own salaries by half and begin privatizing 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.
The yield on Lebanon's dollar-denominated bonds due 2021 was little changed after the announcement, trading more than 300 basis points higher on the day at 24%, according to data compiled by Bloomberg.
To contact the reporter on this story: Dana Khraiche in Beirut at dkhraiche@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Paul Abelsky
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