Abu Dhabi, UAEThursday 17 October 2019

Lebanese cabinet vows to adopt budget in coming days

The cabinet has repeatedly missed deadlines to enact the public expenditure law

A retired army officer in front of the Lebanese Central Bank during a protest in Beirut, Lebanon, 13 May 2019. EPA
A retired army officer in front of the Lebanese Central Bank during a protest in Beirut, Lebanon, 13 May 2019. EPA

Lebanon’s cabinet will hold its last session on the 2019 state draft budget on Friday or Monday, the country’s Information Minister said.

The budget has missed several deadlines for the government to finalise plans for cutting the country's huge deficit.

“It cannot be completed this week because all suggestions must be taken into account,” Information Minister Jamal Jarrah said on Wednesday evening, after cabinet met for the 13th time.

“We will discuss suggestions and figures presented by the Finance Ministry and proceed to examine figures one last time. We hope to finish Friday or Monday.”

Local media reported that he added flippantly that “if we don’t finish it [by Friday], it’s not the end of the world.”

Mr Jarrah has announced several times over the past two and a half weeks that the cabinet’s approval of the budget was imminent.

Mahmoud Qmati, Minister of State for Parliamentary Affairs, told Lebanese daily The Daily Star that the discussions would probably need several more sessions and continue until early next week.

The cabinet did not meet on Thursday as a national day of mourning was observed to honour the memory of Maronite patriarch Nasrallah Boutros Sfeir.

Once approved, the budget still needs to be ratified by Parliament.

It will be the most austere budget in Lebanon’s history, Prime Minister Saad Hariri has warned.

Lebanon has pledged to introduce reforms to rein in the public deficit and increase transparency, to unlock nearly $11 billion (Dh40.4bn) in low-interest loans pledged by the international community in April 2018 at a conference in Paris.

Lebanon has one of the heaviest public debt burdens in the world, and long-stalled reforms are more pressing than ever after years of low economic growth.

But until now, the government has delayed making announcements on controversial measures in the draft budget, such as salary cuts across the public sector, including ministers and MPs.

Civil servants, including teachers, retired soldiers and central bank employees, have staged protests and strikes across the country, demanding that the government does not slash their salaries.

Defence Minister Elias Bou Saab, who called on retired soldiers end to their demonstrations, said on Wednesday that although the ministry’s budget would be reduced by 443bn Lebanese pounds, (Dh1.08bn), salaries would not be affected.

The cabinet has made some less contentious announcements, such as pushing back the military retirement age by five years and temporarily increasing a tax on interest from bank deposits from seven to 10 per cent over three years.

Ministers have started showing signs of irritation at the lack of progress over the budget.

After presenting his proposals to the cabinet, which include oft-repeated ideas such as ending superfluous public spending and fighting tax evasion, Foreign Affairs Minister Gebran Bassil said that “all of us in government are upset that we have not yet reached the desired results”.

Deputy Prime Minister Ghassan Hasbani said on Wednesday: “After several sessions during which a serious debate took place, we, ministers of the Lebanese Forces party, noticed that several points that had already been discussed and approved were raised again.”

Disagreements among ministers have slowed negotiations.

Early on, Economy Minister Mansour Bteich criticised Finance Minister Ali Khalil’s proposals, arguing that figures were incoherent and that GDP projections were too ambitious.

On Tuesday, President Michel Aoun urged citizens to make sacrifices to rescue the country from a financial crisis.

“If we do not all make sacrifices today and waive some of our privileges that we do not have the luxury to preserve, we will lose them all,” Mr Aoun said.

Updated: May 17, 2019 03:28 AM