Lebanese government departments must cut 2018 budgets by 20 pct - PM

BEIRUT, Jan 23 (Reuters) - All Lebanese government institutions must cut their 2018 budgets by 20 percent as part of the country's efforts to revamp its struggling economy, Prime Minister Saad al-Hariri said on Tuesday.

Costs must be reduced "in accordance with the policy of spending rationalisation and controlling public finances," a statement from Hariri's office said.

Lebanon's economy has been battered by six years of war in neighbouring Syria and by simmering political divisions.

After years of paralysis in government decision-making, Lebanon last year passed its first government budget since 2005.

The government is now trying to finalise the 2018 budget, in which analysts and politicians have said they hope to see serious efforts made to get the state's finances in order.

Growth slowed from an average of eight percent before the Syrian conflict began in 2011 and the country has one of the world's highest ratios of debt to gross domestic product, around 140 percent. 2017 growth is estimated to be about 2.5 percent.

The order to slash budgets comes ahead of a major donor conference to be held in Paris in March, at which Lebanon is expected to seek support for its economy and army and to help it deal with the approximately one million Syrian refugees the country is hosting.

The country's crumbling infrastructure has not been overhauled since the end of a 15-year civil war in 1990 and Lebanon has plans for a 10-year $16 billion capital investment programme.

Lebanon recently engaged management consultant company McKinsey to help transform the stagnating economy.

Ministries must present the amended budgets to the finance ministry within two weeks from the decree's publication.

Hariri is attending the World Economic Forum in Davos, Switzerland this week. (Reporting by Lisa Barrington; Editing by Robin Pomeroy, William Maclean)

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