One of the measures signed off on last week was an increase in the value added tax from 10 to 11 percent. REUTERS/ Mohamed Azakir
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Lebanon has begun reforms to repair its fragile economy after years of paralysis in decision-making but is under pressure to do more to prevent its rising debt spinning out of control. President Michel Aoun, elected last year after 29 months without a head of state, signed off last week on public sector pay rises and tax increases to cover their cost – part of a series of government moves that have prompted Moody's rating agency to lift its outlook for Lebanon to stable from negative.Moody's says the debt-to-GDP ratio, which indicates a country's ability to pay back its debt, will reach almost 140 percent in 2018 .The banks buy government debt, which finances the expanding budget deficit and debt.Debt interest payments in 2016 accounted for about 48 percent of Lebanon's domestic revenues, up from 38 percent in 2014, said Harake, the World Bank economist.
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