SAT 15 - 12 - 2018
Mar 13, 2018
The Daily Star
Lebanese Cabinet endorses 2018 budget ahead of donor conferences
Hussein Dakroub| The Daily Star
BEIRUT: The Cabinet Monday endorsed the 2018 draft state budget containing a set of reforms and incentives for all sectors and sent it to Parliament for final ratification, Prime Minister Saad Hariri said, in a move designed to slash the crippling deficit and control government spending ahead of international donor conferences in support of Lebanon.
“The Cabinet approved the 2018 budget, which contains reforms and incentives for all sectors and achieves savings at ministries,” Hariri told a joint news conference with Finance Minister Ali Hasan Khalil after chairing a special Cabinet session on the country’s fiscal plan at the Grand Serail.
Shortly after the Cabinet approved the budget, President Michel Aoun signed the decree that was also inked by both Hariri and Khalil and sent it to Parliament.
“Parliament will do its best to ratify the budget before early April,” Speaker Nabih Berri said during a meeting with Lebanese Forces MP George Adwan at the speaker’s Ain al-Tineh residence.
Hariri said all ministries complied with his memo, issued two months ago, to cut their budgets by 20 percent as part of a drive to rein in state expenditure and slash the 2018 budget deficit, originally estimated at more than LL8 trillion ($5.37 billion).
Khalil said as a result of the budget cuts, the deficit had been reduced to LL7.2 trillion ($4.8 billion).
“We have worked for a long time through the ministerial committee to approve the 2018 budget and we have approved it. In this context, I thank the finance minister and his team for the hard work they did. The endorsement of the budget is considered an achievement for the government,” Hariri said after the three-hour Cabinet meeting.
Hariri and other leaders have stressed that the passing of the 2018 budget and implementation of long-awaited economic reforms would send a positive signal to the international community ahead of the donor conferences. Hariri has said the government hopes to raise billions of dollars in soft loans and grants at the CEDRE Conference in Paris to rehabilitate Lebanon’s aging infrastructure.The Rome II conference, designed to rally support for the Lebanese Army and security forces, is set for March 15 in the Italian capital. The CEDRE conference, also known as Paris IV, is set for April 6 and is aimed at garnering international support to bolster Lebanon’s economy.
A third international conference, to be held in Brussels later in the spring, will focus on support for Syrian refugees in the region.
Hariri emphasized that consensus among political leaders was essential to get things moving in the country, including the passing of the budget.
“The country is built on consensus and without consensus, it’s not possible to achieve anything in Lebanon,” he said.
Acknowledging that Lebanon is facing an economic crisis, the prime minister said: “We must continue reforms in all sectors, in electricity, telecommunications, civil aviation, transport and others. ... With the endorsement of this budget, we have distanced Lebanon from the example of Greece’s [economic] crisis and preserved Lebanon.”
Commenting on the chronic electricity crisis, Hariri said all parties in the country want to see a solution to this problem.
“We are capable of reaching a solution to this problem. No one has doubts that we must ensure electricity 24 hours a day. ... But we must distance the electricity issue from politics,” he said.
His comments were a clear reference to the recent war of words between the Free Patriotic Movement and the Amal Movement, after FPM leader and Foreign Minister Gebran Bassil accused Khalil of withholding funds needed for an expansion project at the Deir Ammar power plant near the northern city of Tripoli.
The deficit at the state-run Electricite du Liban, estimated at between $1.5 billion and $2 billion annually, is partly blamed for the budget deficit.
Speaking at the news conference with Hariri, Khalil said the 2018 budget would not include any new taxes, in sharp contrast with the 2017 budget – the first to be passed since 2005 – that contained more than 20 tax measures to fund salary increases for the public sectors employees and schoolteachers.
“We have worked to reduce expenditures and increase revenues and took measures that could stimulate the economy even relatively, especially since we are on the threshold of [international] conferences. We must stimulate our economy by pumping money into development and infrastructure projects,” Khalil said. “I think we might have an opportunity to achieve a 2 percent growth by the end of 2018.”
Khalil said the total budget amounted to LL23.8 trillion, in addition to a LL2,100 billion loan to cover the EDL deficit.
He added that 38.2 percent of the budget goes to service the soaring public debt, estimated at over $80 billion or 155 percent of GDP.
“We are heading toward real reforms. We know that we cannot do everything at one time, but what’s important is that we are putting ourselves on the right track,” Khalil said. “We have addressed, discussed and approved most of the reform items recommended by Parliament. This matter will emerge in details of the draft budget.”
Khalil also said his ministry was committed to presenting an audit of previous years’ extrabudgetary spending, estimated at billions of dollars. “We will present an audit and settle accounts of previous years,” he said.
Deputy Prime Minister and Health Minister Ghassan Hasbani, one of three ministers representing the Lebanese Forces in the Cabinet, tweeted during the session that the proposed 20 percent budget cuts were a step “in the right direction,” but that the cuts would not be enough to solve Lebanon’s deficit.
“For the budget to be approved, the government should have structural reforms, like the privatization of the telecom sector, the participation of the private sector in electricity production, as well as administrative reforms, such as completely stopping employment in the public sector,” Hasbani said in a tweet.
Meanwhile, during a meeting with Walid al-Bukhari, the new head of the Saudi diplomatic mission in Lebanon, Bassil urged Saudi Arabia to lift the travel warning to Saudi citizens against coming to the country as a prelude to encouraging other Arab Gulf states to do the same, the National News Agency reported. A political source told The Daily Star Sunday that Walid al-Yaacoub has been recalled by the kingdom after being on the job as Saudi Ambassador to Lebanon for less than three months. The source said Bukhari, former Saudi charge d’affaires in Beirut, would head the diplomatic team. Bukhari served as acting head of mission after former Ambassador Ali Awad Assiri’s term ended in August 2016.
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